ABF rating looks 'attractive' compared to retail and consumer peers - analysts
Analysts at RBC Capital Markets reiterated their ‘outperform’ rating on Primark owner AB Foods on Tuesday, noting that its slightly-better-than-expected full-year results were a welcome surprise ahead of the acceleration its US expansion.
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The FTSE 100-listed food processing and retailing company turned in full-year results that were a touch ahead of RBC's estimates on sales, operating profits and adjusted earnings per share.
AB also told shareholders on Tuesday that it expects EPS for the 2019 fiscal year to be in line with its current trading year, which RBC said was “broadly in line” with its 135.5p estimate.
In addition to keeping its 'outperform' rating on the firm, RBC reiterated its 2,700p target price on AB Foods, highlighting that it thought Primark’s price-earnings ratio of around 15 times that of its current year was “attractive” when weighed against its retail and consumer peers.
The broker said that, although Primark’s like-for-like sales had been depressed by a soft performance in northern Europe over the past twelve months, the business continued to offer “relatively strong” growth within the space and that it remained a “best-in-class discounter with very low prices and strong buying power”.
RBC also noted that, with world sugar prices rebounding off lows, the rest of ABF’s businesses appeared to be “in good shape”.
Elsewhere, analysts at Liberum and UBS both reiterated their ‘buy’ ratings, but were slightly more generous when it came to their price targets of 3,500p and 3,150p, respectively.