Olam - Olam off 2.3%; giving back Dreyfus M&A gains

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Golman Sachs

Olam International (O32.SG) is off 2.3% at $2.97 after the company announces its 1H11 results and says it has ended talks with France’s Louis Dreyfus Commodities about a possible collaboration. 

Goldman Sachs, which has a Neutral rating on the stock and raises its target to $3.30 from $3.20, says while Olam’s results are in line, the market’s negative reaction to the cessation of merger discussions was to be expected; it noted that Olam’s stock rose 7.0% after the merger talks were announced on Sept. 23. 

The house says on an adjusted basis, 1H11 core net profit was 41% of its FY11 forecast; “however, 2H tends to be seasonally stronger. Sales volumes were in line with our expectations, but gross contribution margins were stronger than expected” from high commodity prices and Olam’s integration strategy. The stock’s support is likely at last week’s low of $2.94.