UPDATE 1-JP Morgan adds Kraft to US focus list

Feb 10 (Reuters) - J.P. Morgan Securities added Kraft Foods Inc (KFT.N) to its U.S. focus list, saying it expects the British confectioner's earnings potential to increase substantially following the acquisition of Cadbury Plc CBRY.L.

The brokerage said in a note to clients that it expects little to no earnings growth for the company in 2010, but added that it sees low double-digit pro forma EPS growth from 2011 through 2013.

Kraft, which is in the final stages of taking over Cadbury after a prolonged bid battle, has underperformed its peers, with a compression in its relative valuation, J.P. Morgan said.

"We expect double-digit price appreciation by the end of 2010, and investors should benefit from the current 4 percent dividend yield," said JP Morgan, which has a $34 price target on the stock.

The brokerage, while maintaining an "overweight" rating on the stock, said it expects revenue synergies for the two companies to add 60 basis points (bps) of sales growth in 2011.

Shares of Kraft were trading almost flat in early morning trade on the New York Stock Exchange. (Reporting by Juhi Arora in Bangalore; Editing by Anil D'Silva) ((juhi.arora@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: juhi.arora.reuters.com@reuters.net))