Deutsche Likes McCormick, Kellogg, Raises Target Price

[Stocks-to-Watch]

Food prices have performed relatively well during this week’s market turmoil, and Deutsche Bank analyst Eric Katzman reiterated his Buy recommendations on Kellogg (K) and McCormick (MKC) after the two companies presented at the Consumer Analyst Group of New York Conference yesterday.

Katzman wrote in a research note out today that food stocks’ gains in general may be related to the current geopolitical uncertainly that has gripped the markets, but that “it also likely reflects broad-based pricing across most companies and less promotion. However, there has been little comment about elasticity and its likely impact on volume as 2011 progresses. As we have noted, this is critical to 2011 fundamentals.”

He maintained his Buy rating and* $49 price target on McCormick. At the conference, management emphasized the growing role of emerging markets in the business, which should represent 12% of consolidated sales by 2015.

He also maintained his Buy rating on Kellogg, but boosted his target price by $3 to $60. “Kellogg gave a cogent argument about rebounding from 2010 missteps while also adjusting the long-term sales growth rate to 3-4%. We believe this is a logical change to the growth outlook,” he wrote in the note.

Kellogg was off 0.6% to $53.12 in recent trading. McCormick was up 0.9% to $46.86. The stock has gained 3.7% since Barrons.com recommended them in January.



Original Article Source by Barrons.com