Brokers upgrade Kerry after strong results

KERRY Group shares are undervalued with a potential 17.5% upside over the next 12 months Merrion Stockbrokers said last night.

Stockbrokers moved fast yesterday to upgrade their ratings on Kerry Group after the company turned in impressive returns for the first half of the year.

Merrion analyst Niamh Brodie put a 12-month price target of17 on the shares which traded at 14.47 yesterday.

“Following Kerry’s interim results announcement, we have upgraded our 2003 and 2004 EPS forecasts by 1% to 110.7c and 120.9c respectively, representing 9% growth in both years,” Ms Brodie said.

“A strong set of first half results underlines Kerry’s ability to outperform its peer group. At a share price of 14.47, Kerry is trading at a PER of 13.1x current year forecasts and 12x 2004 expectations. In our view, this rating undervalues the company’s resilience and above industry growth characteristics. We maintain our buy recommendation,” she added.

Davy food analyst John O’Reilly in an ‘equity flash note’ to clients enthused about Kerry Group’s ability to consistently deliver results.

“This is Kerry’s 35th interim reporting period as a public company, and the 35th such time it has posted earnings growth. 10.3% EPS growth for the period, in the context of the negative impact of an appreciating euro, is a very good outcome. It is better still compared with the performance of the food industry generally.”

For Mr O’Reilly the most noteworthy number in the interim result was the 6% rise in like-for-like revenue growth, with two-thirds or so from volume and the balance from price. “Peer companies in the ingredients and food manufacturing sectors struggle to achieve a rate of growth close to this,” he said.