Shares in Associated British Foods (LON:ABF) have advanced in today’s session, after analysts RBC Capital Markets hiked their stance and price target on the company. WebFG News reports that the broker has flagged an improvement in the like-for-like sales of the group’s fashion chain Primark.
As of 14:29 BST, AB Foods’ share price had added 0.37 percent to 2,746.00p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.24 percent in the red at 7,615.88 points. The group’s shares have given up more than seven percent of their value over the past year, as compared with about a two-percent gain in the Footsie.
RBC lifts rating on AB Foods
RBC lifted its rating on AB Foods from ‘sector perform’ to ‘outperform’ today, hiking its price target on the shares from 2,800p to 3,100p.
“We see margin upside driven by better buying and inventory control and we think concerns over performance in the US have been overdone,” the analysts pointed out, quoted by WebFG News, adding that Primark’s like-for-like sales should return to positive territory in the second half of this year and FY19 thanks to an ongoing strong product offering and less competition from the likes of New Look, Pep & Co and Lefties.
The broker further expects the fashion chain to benefit from dollar buying gains in the second half of this year and the first half of 2019, strong inventory control as well as strong volume growth which increases its bargaining power with suppliers.
Other analysts on Primark owner
The 16 analysts offering 12-month price targets for AB Foods for the Financial Times have a median target of 3,175.00p on the shares, with a high estimate of 3,600.00p and a low estimate of 2,600.00p. As of June 15, the consensus forecast amongst 21 polled investment analysts covering the blue-chip group has it that the company will outperform the market.