On Tuesday, Kerry Group PLC (KYG:ID) (OTC: KRYAY), a $15.55 billion market cap company with a strong track record of 33 consecutive years of dividend payments, received an optimistic update from Jefferies as the firm's analyst Charlie Bentley raised the stock rating from Hold to Buy and increased the price target to EUR110.00, up from the previous EUR93.00.
According to InvestingPro data, the stock currently trades at a P/E ratio of 24.57, with analysts projecting continued profitability this year. The upgrade follows the completion of Kerry Group's divestment of its Dairy Ireland segment, which Bentley notes has transformed the company into a singular entity focused on Food Ingredients within the 'Taste & Nutrition' business.
The analyst pointed out that this strategic move eliminates the overhang associated with potential shareholding structure changes and is expected to enhance the company's margin profile with minimal impact on earnings per share (EPS). The company already demonstrates solid operational efficiency with a gross profit margin of 44.4%, as reported by InvestingPro, which shows the company maintains GOOD financial health with an overall score of 2.74. Jefferies anticipates that Kerry Group will now work towards demystifying the 'black-box' nature of this division by providing more detailed disclosures, which should facilitate comparisons with industry peers.
Although Kerry Group has already started to unveil some information, such as revealing its 'Biotechnology' revenue at a recent Investor Day, a significant portion of the business remains unclassified. According to Bentley, approximately 70% of the company's operations are yet to be categorized, following a decade of mergers and acquisitions.
The analyst expects that as Kerry Group discloses more information throughout 2025, the increased transparency will allow for easier benchmarking against its competitors. Jefferies' own comparison to peers suggests that there is a potential 20% upside for Kerry Group's shares. While current InvestingPro Fair Value calculations suggest the stock is slightly overvalued, subscribers can access over 30 additional financial metrics and insights to make more informed investment decisions. This anticipated clarity in the company's operations and potential for growth has led to the positive reassessment of the stock's outlook by Jefferies.
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