Broker tips: Tate & Lyle, IQE, Cranswick

(Sharecast News) - Berenberg hiked its target price on food and beverage products supplier Tate & Lyle from 464p to 554p on Wednesday as it said the group had delivered "strategic momentum amid offer uncertainty". Berenberg said Tate & Lyle has entered FY27 with positive end-market and strategic momentum, with management hoping that these factors will accelerate the company's evolution into a "strategic reformulation partner", supporting stronger volume momentum and, ultimately, a valuation re-rating.

However, while the German bank noted that this transition has "long been promised by management", it also highlighted that it was yet to materialise.

Berenberg said it was now waiting to see further evidence that the completion of the CP Kelco integration would mark "a sufficient catalyst to drive the desired changes". It also noted that these dynamics were accompanied by Ingredion's proposed offer to acquire Tate & Lyle, which it thinks offers "mixed outcomes for shareholders".

"We have lowered our earnings forecast to reflect the newly issued FY 2027E guidance from the company. The downgrade to our FY 2027E forecast is largely reflective of lower margin expectations, partly stemming from the profitability headwind associated with the biogum capacity consolidation delay," said Berenberg, which has a 'hold' rating on the stock.

"We have adjusted our valuation methodology to take a mixed approach: 75% reflective of the 615p proposed offer from Ingredion, with the residual attributed to a DCF valuation methodology (379p). Tate & Lyle trades on 12.2x 12 month forward P/E, slightly above its trailing 10-year historical average."

Analysts at Deutsche Bank re‑initiated coverage of IQE on Wednesday, arguing that the semiconductor materials group was "hitting its stride" as demand strengthens across several key end‑markets.

Deutsche Bank set a 60p price target for the stock and started it off with a 'buy' rating, noting that IQE was benefiting from "very strong" demand for products used in data centres and AI cloud infrastructure, as well as in military, defence and satellite communications.

The German bank also said the completion of IQE's strategic review had "greatly strengthened" the company's ability to capitalise on opportunities emerging across the aforementioned fast‑growing sectors.

DB added that its outlook was contingent on IQE completing its planned £81m equity and convertible debt fundraising, which the bank expects to close by the end of June.

RBC Capital Markets upgraded Cranswick on Wednesday to 'outperform' from 'sector perform' as it said that following a recent site visit and strong FY26 delivery, it was confident the company's competitive advantages were durable and growing.

"Vertical integration - from genetics to shelf - gives the group control over costs, quality and traceability, driving premiumisation and creating a business that is nearly impossible to replicate," RBC said. "Record capital is being deployed from free cash flow, with return on capital employed held at a high 18.5%, with sticky partners set to take new volumes, driving share gains, with potential for further operating margin growth."

RBC upgraded forecasts by 4-5% at the adjusted EBIT level, primarily reflecting stronger margin guidance for FY27. It now sits around 2% to 2.5% ahead of consensus across its forecast period.

The Canadian bank also hiked its price target on the stock to 6,100p from 5,500p.