BB&T Says Corn Products International Favorite Idea For 2011(CPI)

BB&T Capital Markets is reiterating its Buy rating and raising its price target on shares of Corn Products International, Inc. CPO to $55 from $50. In a note sent to clients, BB&T writes, "Favorite Idea Full Year 2011. Our view that there is upside to our FY'11 EPS estimate due to bullish legacy business fundamentals and National Starch accretion, combined with an attractive valuation, make it our favorite name on a risk-adjusted basis for 2011. We believe there are other more-risky names that offer greater near-term upside, but, on a full-year basis, we view CPO as the most attractive. How Big a Deal is Corn? Corn is a very significant cost outlay for the company. However, it hedges the vast majority of its exposure in its North American business the prior year. We believe that its North American profit spreads in 2011 will be at least comparable to 2010 due to the pricing umbrella provided by sugar and much tighter industrywide utilization. In its other geographies, its strong market share, solid economic trends, and inflated sugar prices should also afford it the ability to pass through higher corn costs. HFCS volumes into Mexico have begun to lap much more difficult comparisons but remain very robust on a two-year basis. We expect strong corn sweetener volumes to continue through calendar 2011." Shares of CPO closed at $46.68 yesterday.