Barclays lifts Cranswick to 'equalweight' after de-rating

Barclays upgraded Canswick to ‘equalweight’ from ‘underweight’ on Wednesday and lifted the price target to 3,500p from 3,200p as it noted that the shares have de-rated.

The bank initiated coverage of the stock in Aug 2020 with the only ‘underweight’ rating on the street.

“At the time of initiation, declining pork prices, normalising exports to China and a hyper-competitive UK retail environment were the main reasons behind our UW rating,” it said.

“While the company managed these headwinds well, the recent uptick in inflation and production risks from a CO2 shortage drove a sharp derating in the shares to less than 17x on 12-month forward price-to-earnings versus a five-year average of 20x and 21x at the time of our initiation.”

Barclays said it now see the risk/reward as more evenly balanced.