NEW YORK (AP) - Fresh Del Monte Produce Inc.'s purchase of two Costa Rican fruit companies will add significantly to the fruit and vegetable maker's earnings, a Wachovia Capital Markets analyst said in a client note Tuesday.
Jonathan P. Feeney upgraded Fresh Del Monte to "Outperform" from "Market Perform." On Monday, the company said it bought banana producer Desarollo Agroindustrial de Frutales SA and gold pineapple provider Frutas de Exportacion SA for $403 million.
Both banana and pineapple supplies remain tight, Feeney said. He predicted the deal will add more than 34 cents per share to the company"s fiscal year earnings, and raised his 2008 profit outlook to $3.25 per share from $3.10.
Analysts polled by Thomson Financial expect earnings of $3.28 per share, on average.
Separately, Piper Jaffray's Mark D. Churchill said in a note he also expects the deal to add substantially to Fresh Del Monte's production capacity and earnings and reiterated his "Buy" rating on the Coral Gables, Fla., company.
Churchill raised his price target by $2 to $39, implying he expects shares to gain 33 percent over the next 12 months from Monday's close of $29.37.