Shore Capital remains bullish on Associated British Foods (LON:ABF), arguing that good performances from its Primark, grocery, and ingredients units are offsetting the hit from the group’s sugar business, Citywire has reported. The comments came after the FTSE 100 group posted a pre-closing trading update yesterday, ahead of its full-year results due out on November 6.
AB Foods’ share price fell in the previous session following the results, giving up 0.57 percent to close at 2,257.00p. The stock underperformed the broader UK market, with the benchmark FTSE 100 index adding 1.60 points higher to end the session 0.02 percent up at 7,279.30.
ShoreCap bullish on AB Foods
Shore Capital reaffirmed AB Foods as a ‘buy’ yesterday, following the group’s update yesterday when the Primark owner reaffirmed its full-year outlook, with progress expected in adjusted operating profit and adjusted earnings per share, while cautioning that the strengthening of sterling will result in a loss on translation this year of some £20 million.
“While still early days, we do not expect major changes to our full year 2019 expectations of broadly flat group earnings per share, though we will need to work through guidance on Primark new space and margins before confirming,” the broker’s analyst Darren Shirley commented, as quoted by Citywire. While profitability in the group’s sugar division was ‘well down’ on last year due to lower prices, Shirley left 2018 forecasts unchanged on the back of performance elsewhere in the company.
Other analysts on Primark owner
Liberum Capital is also bullish on AB Foods, having reaffirmed the group as a ‘buy’ yesterday, valuing the shares at 3,500p. According to MarketBeat, the Primark owner currently has a consensus ‘buy’ rating and an average price target of 3,167.11p.