A clutch of City analysts have downgraded their predictions for food manufacturer Premier Foods in the light of last week’s profit warning by the company.

RBS downgraded its rating on Premier Foods from buy to hold and cut its target price by a whopping 84%. It said: “We believe an element of the profit loss from the 1H11 customer dispute (widely speculated in the press to have been Tesco) is at least semi-permanent, as competitors have been given greater shelf presence.”

The broker cuts its full-year trading profit forecasts from £230m to £189m in 2011 and from £249m to £216m to 2012 and the target price now stands at just 6p, from 38p before.

Elsewhere, Martin Deboo, at Investec Securities said he expected the company to see a +10% downgrade to its full year EBIT, to below £200m and added that to say new chief executive Mike Clarke had received a “baptism of fire” was the “understatement of the year”.

He added: “The critical question facing Premier and its shareholders this morning is whether the company can survive and whether there is any value left in the equity at all? We expect Premier’s market cap to fall well below £200m. Against this FY11E net debt is being guided upwards and is likely to be in excess of  £900m at year end. The Group pension deficit is in £500m territory. So the equity is now a sliver.

“Despite this, Premier is making some notably firm statements around its financing position and the progress of discussions with its bankers. It retains a credit rating, at least for now. We will no doubt hear more on the conference call but our judgement is that the company will survive in some form.”

>> Premier issues profit warning