Jefferies has upgraded its rating for sweeteners and food products group Tate & Lyle from 'hold' to 'buy' and raised its target price from 690p to 800p, saying that the stock currently offers a 'compelling buying opportunity'.

Tate & Lyle has changed dramatically over the past three years and is no longer known as "that sugar company", according to Jefferies.

"The implementation of the Focus, Fix, Grow strategy in May 2010 has seen significant operational and strategic change with the recent big milestones being the new shared services centre in Poland (September 2011) and the Chicago innovation centre (March 2012) which are now in the early stages of operations."

The broker said that with the new shared services centre operational and the global IS/IT platform currently being rolled out in Europe (to be completed globally by 2014), the £75m of guided synergies will start to become more visible. Jefferies thinks that the market has only factored in around half of these synergies.

"We see improved earnings from 2014 on better execution in the Speciality Food Ingredients division, improved sucralose pricing and realisation of £75m platform synergies.

"We argue that the company has laid a strong foundation for a sustainable growth profile and see the current valuation as a compelling buying opportunity to enjoy future re-rating towards specialty peers on c15x."

By 11:11, shares were up 0.65% at 697p.

BC

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