Shares digital

A decision by Tate & Lyle (TATE) to offer only Fair trade sugar to its retail customers will please growers in Belize and the liberal chattering classes, but David Hallam of brokers Evolution believes the move to access a rapidly growing brand will not ‘make much of a difference’.

Of far greater importance to Tate & Lyle is the outlook for sucralose. The £2.4 billion cap believes demand is still rising and as a result de-stocking should be completed by the end of the 2007/08 financial year.

A move into balance next year within the EU sugar market would also be of great benefit, as this should lead to stronger pricing for both sugar and Tate & Lyle’s cereal sweeteners.

The shares of Tate & Lyle rose 2% to 516p, compared with a price target of 540p slapped on the stock by Evolution’s Hallam. The broker believes earnings per share will reach 32.7p in the year to March 2008 before rising to 44p in fiscal 2008/09, leaving the FTSE-250 stock on a prospective PE of 11.5.

Shares says: The fundamentals are moving in the company’s favour.

by: John Marshall