Tate & Lyle Shares (LON: TATE) Downgraded – Under Pressure YTD

Tate & Lyle (LON: TATE) is facing increased scrutiny as several analysts have downgraded the stock amid concerns about future performance and revised financial forecasts. The food and beverage ingredients company has experienced a significant share price decline, reflecting investor unease over pricing pressures and subdued market demand.

The company's shares have already fallen 27.39% in the month leading up to the most recent downgrade, and stand at -43.39% year-to-date, highlighting the challenges it faces. The stock’s recent performance reflects growing anxiety surrounding the company’s ability to meet its financial targets.

Barclays analyst Alex Sloane downgraded Tate & Lyle to “Equal Weight” from “Overweight,” setting a price target of 430 GBp, a substantial decrease from the previous 650 GBp. Sloane cited concerns that the company’s revised fiscal year 2026 guidance might be overly optimistic and could face strain due to a weaker upcoming contract round. This adjustment follows a prior downgrade from Berenberg in February 2025, which lowered the rating to “Hold” from “Buy” and slashed the price target from 900 GBp to 600 GBp. Berenberg’s decision was influenced by Tate & Lyle's third-quarter fiscal year 2025 trading statement, which revealed pricing pressures and a revision of fiscal year 2025 guidance, anticipating mid-single-digit revenue declines and EBITDA growth at the lower end of the previously forecasted 4-7% range.

Adding to the negative sentiment, BofA Securities also reduced its price target for Tate & Lyle in February 2025, from 730 GBp to 630 GBp, while maintaining a “Buy” rating. This revision came after Tate & Lyle cut its guidance for fiscal year 2026, now expecting organic growth and constant foreign exchange adjusted EBITDA to decline in the low-single digits. BofA Securities adjusted its fiscal year 2026-2027 EPS estimates downward by approximately 10%, citing a slower start to the year for both top-line performance and margins, with no underlying demand improvement in sight.

Tate & Lyle's reported lack of acceleration in Food & Beverage Solutions (FBS) volumes in the second half of the year also contributed to revised EBITDA expectations for fiscal year 2025, anticipating growth at the lower end of the 4-7% range. This announcement triggered an 11% drop in the company's share price, underscoring investor concerns about the company's performance and future outlook. Full-year results for fiscal year 2025 aligned with the reduced forecast issued in February, reporting a 5% organic revenue decline and a 4% increase in EBITDA. The integration of CP Kelco, however, showed positive margin momentum, with CP Kelco's EBITDA margin increasing by 90 basis points in fiscal year 2025, surpassing acquisition plan expectations.

The current market sentiment suggests that Tate & Lyle faces a challenging period ahead. Analyst downgrades and revised financial forecasts reflect concerns about pricing pressures and subdued demand. While the integration of CP Kelco offers some positive momentum, the overall outlook remains uncertain. The company's ability to navigate these challenges and deliver on its strategic initiatives will be crucial in determining its future performance and investor confidence.