Credit Suisse upgrades Associated British Foods to 'outperform'
As emerging market economies continue to slow and the developed world takes centre stage it is hard to find a better structural growth story than Primark, analysts at Credit Suisse explained to clients on Tuesday.
Associated British Foods
2,686.00p
16:44 25/04/24
FTSE 100
8,078.86
17:14 25/04/24
In their opinion the 2015/16 year should see a significant increase in earnings per share (EPS) as the number of Primark establishments opening accelerates and the company enters the US. As well, the profitability of the sugar division has reached its trough, they believe, and will likely recover smartly as the lower beet prices feed into earnings.
EPS, they calculate, will expand at a 15% clip.
Hence, the stock’s EPS multiple is now forecast to decrease to 24 times next year in comparison to 30 times this year.
Given that the Swiss broker’s ‘sum-of-the-parts’ valuation is still pointing to a price target of £30 it has decided to upgrade its recommendation on the shares to ‘outperform’ from ‘neutral’, with a 3,000 priec target.
As of 16:12 shares in Associated British Foods are advancing 4.53% to 2,679p.