NEW YORK ( TheStreet) -- Sara Lee ( SLE) stock has been upgraded to hold from sell based on improved outlook for the company.
Argus analyst Erin Smith said in a research note that she had been concerned that Sara Lee wouldn't be able to find buyers for the businesses it wanted to sell following the resignation of CEO Brenda Barnes, who initiated and led the company's portfolio repositioning to focus on its core meats and beverage businesses.
"However, the past few months have proven otherwise," she said. Smith noted that during this period, Sara Lee has either completed or announced deals to sell almost all its household and body care businesses, and its North American Fresh Bakery business, both of which were underperforming segments. "We believe that these asset sales will help the company to focus on its higher-margin, higher-growth businesses." Still, Smith cautioned that she expects the company's near-term sales and earnings growth to be limited by company-specific and industry-wide factors, including renewed cost inflation for coffee and other products. She added that the company also expects difficult year-over-year comparisons in the second quarter and continued challenges in markets such as Spain and the Netherlands.