Units in Menu Foods Income Fund fell more than 24 per cent Monday after the Ontario pet food company recalled up to 60 million containers of cat and dog food.
The units closed at $4.15 each on the Toronto Stock Exchange, down $1.35. Earlier in the day, the unis traded as low as $3.02.
Aleem Israel, an analyst with Sprott Securities, said the current weakness could represent a buying opportunity. He said the shares could rise to $7.75 in 52 weeks.
“We have lowered our estimates and raised our debt forecast given the costs of the recall.” Mr. Israel wrote in a research note Monday. “ . . . we reiterate our buy recommendation and believe that investors should use the current weakness as a buying opportunity.”
Menu Foods Inc. of Streetsville, Ont., is one of North America's biggest manufacturers of pet food. On Friday, the company issued a massive recall after reports of fatal kidney failure among animals eating its products.
Menu Foods products are sold under the brand names Iams and Eukanuba as well as being marketed as the in-house brand for Dominion, Sobeys and others.
Ten animal deaths have been reported in the United States. More pets have experienced other kidney problems including loss of appetite, lethargy and vomiting. No deaths have been reported in Canada, but the recall is continent wide.
Menu Foods, working with Cornell University scientists, has been so far unable to locate the cause of the problem.
© The Globe and Mail
