ShoreCap says ABF well positioned to 'ride out a notable storm'
Associated British Foods
2,635.00p
16:35 26/04/24
ShoreCap reiterated its 'buy' recommendation for shares of Associated British Foods, hailing its "exceptionally good liquidity".
Food Producers & Processors
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16:59 26/04/24
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The food ingredients manufacturer was also 'well positioned' when it came to the solvency of the group and its ability to "ride a notable storm", the City broker said.
Its analysts also noted that all of the company's operations, bar retail, were continuing to trade.
As of February, ABF had £800m of cash on hand and ShoreCap believed it had fully drawn down its £1.1bn revolving credit facility on top of that.
"We cannot predict the financial impact of COVID-19 upon ABF’s FY2020 earnings, but they will clearly be below recent prevailing market and Company expectations.
"As such, we are withdrawing our FY2020 [current pre tax profit] and EPS estimates.
"Unusually, however, we are retaining our BUY recommendation on ABF stock because beyond being what we deem to be a demonstrable relative outperformer in these terrible, worrying, times, we also believe it is a still profitable, solvent and liquid organisation that has the basis to prosper in what could be a somewhat different world down the line."