Berenberg lowers target price on Greggs

(Sharecast News) - Analysts at Berenberg lowered their target price on fast-food bakery giant Greggs from 3,250.0p to 3,040.0p on Thursday, noting that like-for-like volatility had continued. Berenberg said that recent high temperatures across the UK had resulted in a deceleration in Greggs' like-for-like sales growth and a 5% downgrade to consensus expectations for FY25 adjusted operating profits.

Greggs reported 2.6% year-on-year like-for-like sales growth in H125, implying a roughly 1.3% deceleration relative to the first 20 weeks of FY25, something it attributed to worsening footfall trends stemming from warm weather.

Greggs now expects to see "a modest reduction" in adjusted operating profits in FY25, resulting in a roughly 5% downgrade to Visible Alpha consensus.

The German bank, which reiterated its 'buy' rating on the stock, said it continues to think Greggs' broader equity story "remains intact" despite the continuation of volatile trading conditions.

"We now project group lfl sales growth of 2% yoy in FY 2025E, down by 1ppt versus our prior forecast. This has resulted in a 6% downgrade to our adjusted operating profit forecast in FY 2025E given the impact of operating leverage," said Berenberg. "Our revised lfl forecast implies continued demand softness across July and August at levels similar to what is implied in June trading."

Reporting by Iain Gilbert at Sharecast.com