The Globe and Mail reports in its Tuesday, July 25, edition that Scotia Capital analyst George Doumet continues to prefer food processors over grocers, recommending both Maple Leaf Foods and Premium Brands Holdings for investors. The Globe's David Leeder writes that Mr. Doumet has reaffirmed his "sector outperform" call for Premium Brands and Maple Leaf Foods. Mr. Doumet boosted his share target for Premium Brands to $130 from $121. Analysts on average target Premium Brand shares at $119.40. Mr. Doumet raised his share target for Maple Leaf by 50 cents to $33.50. Analysts on average target Maple Leaf shares at $33.08. Mr. Doumet says in a note: "From a valuation perspective, processors' outperformance improves during periods of decelerating inflation (such as now) -- while from a more fundamental perspective, we are cautious on the grocers' margins -- and believe the more value-add processors (Premium Brands) are well positioned to benefit from some expansion (holding price in a disinflation commodity price environment and higher throughput). Furthermore, we expect internal initiatives at both MFI and SAP to significantly increase manufacturing efficiencies and lift margins over the next few years."
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