Earnings at multinational banana companies are likely to be lower in the short term as a result of the recent E coli scare, according to analyst Jonathan Feeney of Janney Capital Markets.
The financial commentator has lowered his second-quarter earnings estimates for Chiquita, Dole and Fresh Del Monte, although he did observe that, despite earnings being lower than expected for the those groups, the companies still represented a good investment.
According to Feeney, European banana prices slipped by 29 per cent following the recent outbreak, which was originally linked to salad vegetables before being traced to a beansprout farm in nothern Germany.
'The risk/reward remains compelling in these names given their cheap valuations and the unchanged long-term value of their businesses,' Feeney said of the big multinational fruit companies in an interview with the Associated Press.
A total of 40 people have now died from disease linked to the E coli outbreak, Germany's disease control centre reported on Monday, 20 June 2011.
