Del Monte Price Target Raised
(Del Monte article updated with analyst commentary and Friday stock price movement.)
SAN FRANCISCO, Calif. (
) --
Del Monte Foods
(DLM)
raised its earnings guidance for 2010 Thursday amid a better-than-expect third quarter report, triggering a positive response from financial services firm Stephens.
Del Monte stock jumped 5.8%, or 72 cents, to $13.22 within 15 minutes of the opening bell Thursday, and is currently up 1.5% at $13.70 in Friday's pre-market trading session.
In light of Thursday's Del Monte news, Stephens maintains its overweight rating for Del Monte and is increasing its price target to $16 from $14.
"Del Monte is executing better than it has for the past 5 years," Stephens analyst Farha Aslam says. "The company is delivering solid growth fueled by higher-quality marketing, new product innovation, better customer service, and a greater focus on cost control. We believe a more benign commodity environment ismaking the business easier to manage."
Del Monte now expects earnings from continuing operations of $1.07 to $1.11 a share, compared with previous expectations of 93 cents to 97 cents a share. The consensus estimate for the company's 2010 earnings is $1.06 a share.
For the third quarter, Del Monte reported income of $57.2 million, or 28 cents a share from continuing operations, including pretax costs of 6 cents a share related to the refinancing of its senior credit facility, compared with $59.6 million, or 30 cents a share, in the prior year. Revenue rose 7.5% to about $1 billion, driven primarily by strong unit volume gains. The Street consensus estimate for the quarter was 21 cents on revenue of $982.3 million.
Del Monte has nearly doubled its marketing investment this quarter versus the prior year to strengthen the company's key equities.
-- Reported by Andrea Tse in New York
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