DLM To Deliver Robust LT Profit Growth
Analysts at Deutsche Bank upgrade Del Monte Foods (NYSE: DLM) to “buy”, while raising their estimates for the company. The target price for DLM has been raised from $12 to $14.
Deutsche Bank’s research note states “After such strong 2009 stock performance, we would normally be reluctant to upgrade our opinion. However, Del Monte is in transition to being a better company and has the potential to deliver more consistent growth in years to come. We thus believe the valuation should be closer to the peer group than the current 17-18% discount (using C2010E P/E).”
The analysts believe that “mix improvement from Pet segment profits, internal productivity (3% of COGS) and higher advertising (6% of sales)” would drive robust profit growth at DLM.
Deutsche Bank has raised its EPS estimate for 2011 to $1.18.
