SunTrust Robinson Humphrey Initiates Fresh Del Monte Produce (FDP) with a Buy

August 8, 2008 8:15 AM EDT

SunTrust Robinson Humphrey initiates coverage on Fresh Del Monte Produce (NYSE: FDP) with a Buy rating and a $29 price target.

The firm expects worldwide demand for fresh fruit to remain strong for three reasons: health and wellness becoming a consumer focus, organic foods growing in popularity, and non-traditional geographies (i.e. the Middle East) having an increased availability of a wider variety of fruits.

Also, FDP’s acquisition of Caribana enhances the top and bottom line prospects for the next few years, in the firm’s view. The firm also believes it accelerates the ongoing industry consolidation creating a more rational competitive environment.

In addition, the firm said, "Over the past year the company has faced a ‘perfect storm’ of negative events including weather related supply shortages, spiking commodity costs and labor issues. While several of these will continue to hamper operations for the next two quarters, we believe that this negative news is fully reflected in the stock price."

Fresh Del Monte Produce, Inc., through its subsidiaries, engages in the production, transportation, sourcing, distribution, and marketing of fresh and fresh-cut fruit and vegetables worldwide.

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