DLM Reports Robust Operating Margins for Q2

Analyst Timothy S Ramey of DA Davidson & Co maintains his “buy” rating on Del Monte Foods Co (NYSE: DLM), while raising his estimates for the company. The target price for DLM has been raised from $14 to $17.

DLM has reported its Q2 operating EPS significantly ahead of the estimates and the consensus due to lower input costs and productivity savings. Del Monte Foods’ margins rose 610 basis points YoY during the quarter.

DLM’s robust performance during the quarter was driven by the efforts related to reinvesting in brands. Robust operating margins would help DLM to refinance its balance sheet, the analyst believes. DA Davidson & Co has raised its EPS estimates for 2010 and 2011 from $0.92 to $1.07 and from $1.05 to $1.20, respectively.