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Shore Capital still sees upside at AB Foods despite recent woes
(Sharecast News) - Shore Capital has kept a 'buy' rating on Associated British Foods despite a "mellow" trading update from the food and retail company last week, saying that it still sees upside following a disappointing run in the shares so far this year. ABF shares dropped last week after the company reported that it was facing a number of challenges, from weaker shopper sentiment in France to oversupplied sugar markets across Europe and a flat performance at its Primark division.
As a result, Shore Capital has cut its EPS estimates for the year to 13 September by 1.8% to 170.4p, implying a 14% year-on-year fall.
The broker has also reduced forecasts for the following year, saying that a recovery in the struggling Sugar division "may be a bit further out than [the company] first thought".
Nevertheless, Shore Capital kept an optimistic view on the shares, saying: "The stock trades on disappointing multiples, reflecting the news flow of 2025, where EPS is forecast to fall by c.14% YoY. However, whilst a poor equity performer this year, the investment programme, financial constitution and prospects for the firm mean we see value and so keep our somewhat bruised BUY stance."
ABF shares were 1% lower at 1,981.5p by 1328 BST, putting it down 13% over the past month alone.
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