AJ Bell reckons that Associated British Foods (LON:ABF) has weathered the retail storm and its broad range of businesses means the good bits can cushion the bad, Citywire reports. The comments came as the Primark owner updated the market on its recent performance yesterday.
AB Foods’ share price outperformed a flat market in the previous session, with the stock gaining 0.74 percent to close at 2,462.00p. This morning, the shares have given up 0.28 percent to 2,455.00p as of 08:13 BST, as compared with a 0.16-percent fall in the Footsie.
AJ Bell weighs in on AB Foods
Citywire quoted AJ Bell analyst Russ Mould as commenting yesterday that AB Foods’ Primark unit had ‘managed to crack on unperturbed’ as the UK high street suffers and the expansion into the US ‘appears to be going well’. The comments came after the FTSE 100 said yesterday that its revenue had climbed three percent in the 40 weeks ended June 22.
“Overseas expansion can be a drain on management time and many companies underestimate the cost of breaking into a new market and the intensity of competition,” Mould pointed out, adding that the benefit of having a conglomerate structure was “that the good parts can help to cushion the bad bits – and that’s certainly the case with ABF”.
‘Good chance of success’
Hargreaves Lansdown’s Nicholas Hyett meanwhile said in a note yesterday that while cracking the US was ‘undoubtedly going to be a challenge’ for the Primark owner, the group had “a balance sheet packed with cash and an excellent record of expanding in new territories”.
“The road might be rocky, but we think ABF has a good chance of success,” the analyst pointed out. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating, while the average AB Foods share price stands at 2,896.69p.
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.