The Share Centre argues that Associated British Foods’ (LON:ABF) latest interim results are not as discouraging as investors appear to think, Citywire reports. The Primark owner’s shares took a hit yesterday after the company warned that it now expected the sales and profits at its Sugar business to come in lower than previously forecast for both for this financial year and next.
AB Foods’ share price gave up 4.16 percent to close at 2,604.00p in the previous session. The group was the FTSE 100’s biggest faller in percentage terms for the day, with the index adding 30.13 points to end the session 0.40 percent higher at 7,603.22.
The Share Centre weighs in on results
Citywire reports that The Share Centre’s analyst Ian Forrest had retained his ‘hold’ recommendation on AB Foods, arguing that the “longer-term growth prospects for Primark, its budget fashion chain, remain sound and there is increasing global demand for food”. The comments came after the company left its outlook unchanged, with an increased profit from Primark driven by higher margins, set to help offset the downbeat performance at the group’s Sugar business.
“Given that the shares have fallen sharply over the past six months, these results gave the market some confidence,” he pointed out.
Other analysts on AB Foods’ update
Reuters quoted Mike van Dulken, head of research at Accendo Markets, as commenting yesterday that while AB Foods’ full-year guidance remained unchanged, traders were “clearly taking this with a pinch of sugar”.
Liberum Capital reaffirmed the Primark owner as a ‘buy’ yesterday, without specifying a price target on the shares. According to MarketBeat, the group currently has a consensus ‘buy’ rating and an average price target of 3,230.17p.