08:51 AM EDT, 07/10/2024 (MT Newswires) -- Analysts were divided on the implications for Maple Leaf Foods Inc.'s ( MLFNF ) stock price after the company announced it will split into two publicly-traded entities.

The Canadian food producer on Tuesday said it will spin off its pork business and retain an ownership stake of approximately 20%, as part of a plan that is set to be completed in 2025.

Maple Leaf shares rose 8.7% to $24.40 on the Toronto Stock Exchange Tuesday.

TD Securities analyst Michael Van Aelst raised his target on the stock to $36 from $31, and maintained a Buy rating.

"Other than 'New Pork' potentially better leveraging fixed costs by improving slaughtering capacity utilization, we see little other change to the mid-term business outlooks," Van Aelst said in a note to clients.

"That said, separating MFI into two companies should allow valuation to move higher as the larger, higher-margin and more stable consumer packaged goods business shines through without the burden of the pork business' margin volatility," the analyst said.

RBC Capital Markets analyst Irene Nattel left her $29 price target and Outperform rating unchanged.

"We have long argued that muddied earnings visibility at Maple Leaf Foods ( MLFNF ) is a key factor behind MFI's depressed valuation," Nattel said in a note to clients.

The analyst said the company's split into two publicly traded entities "could prove to be a first step toward improving line of sight on the earnings trajectory and therefore valuation."

"However, at this point we have more questions than answers," Nattel said. "At current time, too many unknowns to determine ultimate trading impact."

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)