Street Calls of the Week
Investing.com - Morgan Stanley initiated coverage on Tate & Lyle Plc (LON:TATE) (OTC:TATYY) with an Equalweight rating and a price target of GBP5.90.
The research firm notes that Tate & Lyle has transformed itself through divestment and its $1.8 billion CP Kelco acquisition into a specialty food ingredients player with leading positions across Alternative Sweeteners, Pectin and Soluble Fibers.
The company focuses on developing solutions that support cleaner label, tastier and more nutritious foods and beverages by reducing sugar and calories while adding texture, stability, fiber and protein.
Morgan Stanley points out that Tate & Lyle’s strategic ambition is to deliver ingredients-like compound growth of 4-6% LFL mid-term with margins above 20%, having achieved 21.9% in FY24/25.
The firm’s analysis indicates growth targets may prove challenging in the near term given the macroeconomic backdrop, with the valuation discount to peers potentially closing slower than desired due to volatile earnings history and net debt to EBITDA ratio at 2.9x.
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