Financial Trading Blog
Stock of the day 31/03/2016 – Tate & Lyle PLC
Starting 2016 just shy of £6 (a solid recovery from 2015’s Black Monday-inspired, 5-ish year sub-£5 lows) things started off rather promisingly for Tate & Lyle, which managed to rise to a 9 month high of £6.27 as January came to a close. Yet that nascent rise was soon nipped in the bud as February got underway.
For the last two years February has been a bit of a horrorshow for Tate & Lyle; back in 2014 it plunged 16% after its early in the year update, whilst in 2015 it dropped just shy of 14% following its similarly timed statement. Things weren’t as bad this time around, though the company still couldn’t avoid a nasty 7% slide (on top of the 8% drop it saw in the first week of the month) as it revealed that the current slumps seen by the Mexican peso and Brazilian real, and the continued issues in the US ethanol industry, would lead its full year adjusted profit to be ‘modestly below’ previous expectations.
(Source: IT-Finance.com 31/03/2016)
Obviously investors weren’t impressed by Tate & Lyle once again announcing something akin to a profit warning, a too regular occurrence for the agribusiness firm, its post-update performance causing the stock to hit at a 5 month intraday low of £5.29. Yet CEO Javed Ahmed and CFO Nick Hampton soon swung in to save the day, buying up 50000 shares between them to help put the stock back on the road to rebound, if not recovery. The broader market gains didn’t hurt either, and by the start of February the stock was once again teasing the £5.90s.
The announcement of George Osborne’s sugar tax during his annual budget seemed to cause some concern in mid-March, helping to push Tate & Lyle back towards the £5.50 mark even though some have argued that, as the exclusive producers of Splenda in the UK, the company may benefit from a shift away from sugar by Big Soft Drink. Since then a general market recovery, and a ‘Buy’ rating from Liberum Capital, has lifted the stock back to a current trading price of £5.76 (IT-Finance.com, 31/03/2016).
Tate & Lyle PLC has a consensus rating of ‘Hold’ with an average target price of £6.44.
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