UPDATE: Citigroup Lowers PT on Ingredion Following 2013 EPS Guidance Reduction
In a report published Tuesday, Citigroup analyst David Driscoll reiterated a Neutral rating on Ingredion (NYSE: INGR), but lowered the price target from $73.00 to $67.00.
In the report, Citigroup noted, “Ingredion's 2013 EPS guidance reduction of $(0.55) to a new range of $5.10-$5.40, was a startling turn of events for a company that has been on a hot streak over the past 3 years. Further, with a good corn crop seemingly on the horizon, one may wonder if now is the time to buy the stock. We remain cautious, as sugar price declines have been precipitous with Mexican & U.S. sugar prices having declined by 30% to $0.28/lb Y/Y in June. Even $5/bu corn would likely produce expensive HFCS relative to Mexican & U.S. sugar values, and suggests ongoing 2014 risk of lower HFCS volumes (as sugar substitutes), a continuation of the theme we wrote about in our January 2013 downgrade of Ingredion. Corn and sugar aside, there is also risk that the Argentine situation degrades further, whenever the Argentine government goes ahead with its expected devaluation. Ingredion has a deep management team that has dealt with all of these types of challenges before, so we don't discount that there is more they can do to effect the situation; however, until the 2014 EPS picture comes into better focus, we reiterate our Neutral rating.”
Ingredion closed on Monday at $62.57.
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