Gruma SAB, the world’s biggest maker of tortillas, rose to a record as brokerage Corporativo GBM SAB said the company has room to increase profit margins in the U.S., where it sells Mission-brand products.
The shares rose 3.1 percent to 110.34 pesos at 12:01 p.m. in Mexico City after GBM increased Gruma’s 2014 price target to 132 pesos per share, a 23 percent premium to yesterday’s closing price. Gruma shares more than doubled last year as operating income rose almost 80 percent.
The tortilla business has a “promising future,” GBM analysts led by Miguel Mayorga wrote in a research note yesterday. The Hispanic population will grow faster than other groups, and there is an “increasing popularity of Mexican food among the Anglo population.”
GBM predicts that corn prices this year will remain lower than in 2013 because of a strong U.S. harvest, reducing Gruma’s costs. The company pushed through tortilla price increases last year. The brokerage’s previous price target for Gruma shares was 109.5 pesos, set on Oct. 23.
“In the U.S., we’re seeing huge opportunities to still grow, since we are the leaders in the industry,” Gruma Chief Financial Officer Raul Cavazos Morales said on an October conference call with investors.