Tate & Lyle (TATE) has received a new Hold rating, initiated by Berenberg Bank analyst, Sam Darbyshire.
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Sam Darbyshire has given his Hold rating due to a combination of factors affecting Tate & Lyle’s current market position. The company is experiencing a challenging phase characterized by weak demand, which has led to approximately a 3% decline in cumulative organic volumes since FY23. There is no clear sign of an imminent turnaround in its core markets, which adds to the uncertainty surrounding its growth prospects.
Despite these challenges, the acquisition of CP Kelco is expected to bring future revenue synergies, projected to reach a $70 million run-rate by the end of FY29. Additionally, cost synergies from this acquisition are anticipated to lead to an EBITDA inflection in FY27, with a $50 million run-rate by the end of that fiscal year. This is expected to help recover the adjusted EBITDA to pro forma FY25 levels after an estimated 6% decline in FY26. These factors combined justify the Hold rating, as they suggest potential for recovery but also highlight current uncertainties.
Based on the recent corporate insider activity of 17 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of TATE in relation to earlier this year.