RBC initiates coverage of Cranswick, Hilton Food at 'sector perform'

RBC Capital Markets initiated coverage of Cranswick and Hilton Food on Wednesday, both at ‘sector perform’.

It said Cranswick is an impressive business categorised by solid returns on capital, strong cash generation and consistent investment behind its brand. "In addition, demand for its categories has seen a strong boost this year thanks to Covid-19.

"That said, our adjusted present value calculation and EV/invested capital relative to return on invested capital analysis implies it is fairly valued."

RBC has a 3,900p price target on Cranswick.

The bank said Hilton Food’s growth has been driven by capex and M&A "in the face of lacklustre category growth" and that this is unlikely to change given rising consumer concerns around animal protein.

"Despite an acquisitive and capital intensive strategy, Hilton Foods' ROIC still lies well above our branded consumer goods coverage. Strong cash generation has kept leverage in check, providing room for diversification opportunities and dividend optionality," RBC said.

The bank set a 1,200p price target on Hilton.