Shares in Associated British Foods (LON:ABF) have fallen deep into the red in today’s session, as analysts at Goldman Sachs abandoned their bullish stance on the shares. The move came after the Primark owner updated investors on its full-year performance yesterday, flagging lower sugar profits going forward.
As of 13:27 GMT, AB Foods’ share price had given up 3.05 percent to 3,119.88p, as compared with a 0.02-percent drop in the benchmark FTSE 100 index. The group’s shares, however, remain more than 18 percent higher over the past year, and some 13 percent up in the year-to-date.
Goldman Sachs lowers rating
Goldman Sachs trimmed its rating on AB Foods from ‘buy’ to ‘neutral’ today, following the Primark owner’s results yesterday when the company cautioned that it is expecting lower profits from its sugar business next year.
WebFG News reported that the analysts had lowered their forecasts for sugar earnings before interest and tax (EBIT) for the 2018 and 2019 financial years by around 10 percent to reflect the lower EU sugar price. The broker further trimmed its constant currency Primark revenue growth forecast by 300 basis points to nine percent per year all the way out to FY 2022, assuming a return to store cannibalisation in Europe and a slowdown in space growth to eight percent from 10 percent.
The 2018 PBT forecast was therefore reduced to £1.41 billion, while 2019 was trimmed to £1.49 billion, with earnings per share estimates lowered to 136.41p and 145.08p, respectively.
Other analysts on AB Foods
Jefferies meanwhile remains bullish on the Primark owner, maintaining its ‘buy’ rating on the shares, with a price target of 3,600p, while JPMorgan Chase & Co continues to see the stock as ‘overweight,’ with the same valuation. According to MarketBeat, AB Foods currently has a consensus ‘buy’ rating and an average price target of 3,315.76p.