JP Morgan has upgraded Sara Lee from neutral to overweight, predicting a strong second quarter would lift the company’s share price.
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In a note to investors, JP Morgan analyst Pablo E Zuanic, said that long term operating risk had been by Sara Lee’s cost cutting and reorganisation efforts. The brokerage noted that Brenda Barnes, Sara Lee chief executive, said in a recent meeting that the company’s results were starting to show benefits from these initiative in terms of sales and margins.
JP Morgan said Sara Lee should outperform its peers, but remained cautious about the prospect of a limited buyout.
“Sara Lee is well through the second half of its cost reduction program, showing the benefits of the recent restructuring, and is already transferring a large amount of cash to shareholders via share buybacks,” Zuanic wrote.
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