Goodbody upgrades its Glanbia forecast on strong performance

Stockbroker firm Goodbody has upgraded its 2012 forecast for Glanbia to €6.50 per share, based on its consistently strong performance over the past four months.

With Glanbia’s share price closing at €5.93 on Monday, Goodbody’s target effectively projects a 6% growth in share value for the remainder of the year. Glanbia’s share price is up 44% since Goodbody gave it a ‘buy’ rating in November.

Last week, Glanbia’s accounts unveiled an 18% operating profit surge to €161m, with revenue up 23% to €2.7bn.

Though Glanbia is predicting a tightening domestic dairy market in Ireland for the remainder of 2012, the group is forecasting 5%-7% growth in share earnings, based on likely growth at its overseas operations, notably at its US-based nutritional group members.

This earnings projection is an exact match with Goodbody’s newly revised forecast.

In a market wrap yesterday, Goodbody predicted further growth at Glanbia group members BSN, Optimum Nutrition and Seltzer in the US, Kortis in Germany and at its whey ingredients operations.

“Looking ahead, the strongest growth is being generated from its sports nutrition business, where we are forecasting 18% sales growth in financial year 2012, of which half is volume related,” Goodbody said.

The stockbroker said its ‘sum-of-parts’ valuation model rates the food group’s current price as fairly valued. It said the medium outlook is very favourable, and that some other market catalysts could see Glanbia’s global ingredients sector perform even stronger than this latest revised forecast.