Reuters: Mergers News: UPDATE 1-RESEARCH ALERT-JP Morgan raises Kraft to overweight

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UPDATE 1-RESEARCH ALERT-JP Morgan raises Kraft to overweight Apr 30th 2012, 12:35 Mon Apr 30, 2012 8:35am EDT * Kraft likely to beat Q1 earnings estimates * Kraft growing sales, volumes faster than peers * Cuts TreeHouse to neutral from overweight April 30 (Reuters) - Kraft Foods Inc, North America's largest packaged food maker, is likely to beat market estimates for first-quarter earnings, J.P. Morgan Securities said, raising its rating on the company to "overweight" from "neutral." Kraft, maker of Oreo cookies, Cadbury chocolate and Maxwell House coffee, has been growing sales and volumes faster than its peers, JP Morgan analysts led by Ken Goldman said, citing Nielsen data. They expect Kraft to report a first-quarter profit of 59 cents per share, 3 cents above the average analysts' estimate, according to Thomson Reuters I/B/E/S. JP Morgan's Goldman is a four-star rated analyst for the accuracy of his earnings estimates on Kraft Foods, according to Thomson Reuters StarMine. JP Morgan analysts also expect Kraft's grocery company, to be spun off later this year, to be able to pay over 60 percent of its free cash flow toward dividends and still have between $500 million to $1 billion left to repay debt. "We think (the grocery company's dividend) yield could attract income investors and lead to a better price/earnings multiple than most domestic, slower-growth companies typically receive," the analysts said in a client note. Kraft, scheduled to report quarterly earnings on Thursday, announced a move to spin off its grocery business from its snacks unit last August. {ID:nL3E7J42PN] JP Morgan also cut its rating on private label food maker TreeHouse Foods Inc to "neutral" from "overweight" saying that the warmer-than-expected winter in the United States might have hurt demand for many of the company's products like condensed soup and powdered creamers. However, the analysts said TreeHouse may still be an attractive stock over the longer term as private label companies would continue to take market share away from branded companies. Link this Share this Digg this Email Reprints

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