Credit Suisse has lifted its valuation on Associated British Foods (LON:ABF), pointing to the potential for the introduction of a ‘click and collect’ model. The analysts have further cited the likely boost to earnings from currency tailwinds alongside an ‘attractive’ entry point in valuation terms.
AB Foods’ share price has been little changed in London this afternoon, trading at 3,322.00p as of 13:45 BST, flat in percentage terms. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.24 percent higher at 7,448.74 points. The group’s shares have added more than seven percent to their value over the past year, and are up by some 21 percent in the year-to-date.
Credit Suisse, which sees AB Foods as an ‘outperform,’ lifted its price target on the stock from 3.350p to 3,600p today. The analysts pointed to the group’s sustainable cost advantage versus peers, noting that the potential introduction of an online ‘click and collect’ model might boost the firm’s margins and sales. The Swiss bank meanwhile cautioned that it would be premature to look for a positive impact from dollar weakness on the company’s EBIT margins.
“Currency impact is still to fully work through, mark-downs were abnormally low this year, Primark traditionally reinvests in price, and the US is still in investment phase,” Credit Suisse said, as quoted by Sharecast, adding, however, that those forex tailwinds would help when translating the clothing chain’s overseas profits into sterling.
The comments come after Jefferies recently reiterated its bullish stance on the FTSE 100 group, pointing to progress in expanding its Primark clothing stores into the US.
The 17 analysts offering 12-month price targets for AB Foods have a median target of 3,300.00p on the shares, with a high estimate of 3,700.00p and a low estimate of 2,200.00p. As of August 25, the consensus forecast amongst 21 polled investment analysts covering the Primark owner has it that the company will outperform the market.