Goldman Sachs upgrades AB Foods to 'buy' on US move
Goldman Sachs upgraded Associated British Foods to ‘buy’ from ‘sell’ and raised the price target to 3120p from 2755p, saying that the stock’s 17% underperformance year-to-date offers an attractive entry point.
Associated British Foods
2,442.00p
16:35 18/04/24
Food Producers & Processors
7,605.79
17:14 18/04/24
FTSE 100
7,877.05
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
It said that AB Foods has de-rated over 20% since December 2014 versus the consumer staples sector and versus European retail peers such as H&M, Inditex and Ted Baker.
In addition, GS said that its analysis of the US market suggests that the launch of Primark, due in autumn this year, will be a success.
Goldman said it expects the launch of the Primark store in Downtown Crossing, Boston, to provide a catalyst re-focusing investors on the long-term Primark growth story following near-term negative sentiment around sugar and dollar sourcing.
“We estimate the US Primark stores will add £720m to group earnings before interest and tax by 2020, and believe near-term concerns from weak sugar, and dollar sourcing for Primark, have been well flagged,” said Goldman.
GS estimates that Primark will grow at a rate of 20 new stores per annum in the US alongside continued rollout in Europe.