Premier foods stock price surges 23% on sales jump

Shares of Premier Foods (LON:PFD) skyrocketed today after the food producer said it expects to report sales surge for the first quarter amid the coronavirus lockdown that prompted panic buying.

Fundamental analysis: First quarter sales jump

The UK-based Premier Foods said in the trading update that it expects its UK sales to jump by 7.3% in the first quarter, mainly thanks to a rise in March UK sales by 15.1%. The manufacturer of Mr Kipling and Bisto added that it expects to report in excess of £90m of cash generated from operating activities.

“Volumes have started to reduce from the exceptional levels seen in March, although are still expected to continue to be higher than average patterns of demand. This reflects more meals being eaten at home than usual due to recent measures set out by the government, and hence increased demand for the group’s product ranges,” the company said in the statement.

“The Board now expects to report Trading profit for the 52 weeks ended 28 March 2020 at the top end of market expectations”.

The manufacturer added that it operates at a maximum capacity as the high demand for food persists. As a result, the company has decided to award each factory worker with two additional days of annual leave and a £250 cash bonus.

Premier Foods is scheduled to report first-quarter earnings on 04 May.

Data from consumer analyst firm Kantar, showed a huge increase in shopping in the UK in March. Accordingly, year-on-year supermarket sales grew by 20.6% in the last four weeks of March, surpassing levels witnessed for the Christmas period.

Technical analysis: Almost full recovery reached

Shares of Premier Foods jumped more than 23% following the release of a trading update from the food manufacturer. The stock price, which trades at 39.25 pence, has now recovered more than 80% of losses recorded from the COVID-19 outbreak.

The price action is now testing horizontal resistance around 41 pence, which represents the 2019 high. A break of this level would pave the way for a test of the January high near 46 pence. On the downside, the buyers are supported by the confluence of the two key moving averages, currently trading around 34 pence.

Summary

Shares of Premier Foods have surged more than 23% after the food manufacturer said it expects its UK sales to jump by 7.3% in the first quarter, mainly thanks to a rise in March UK sales by 15.1.