- Greggs
- 06 March 2025 11:40:56
Source: Sharecast
Berenberg reckons Greggs' longer-term opportunity remains intact despite a cyclical headwind to life-for-like sales growth at present, noting that pressures that have driven a deceleration in sales growth were "both cyclical and industry-wide", rather than company-specific issues associated with the store estate reaching or nearing saturation point.
The German bank, which reiterated its 'buy' rating on the stock, said its conviction in its stance was enhanced by Greggs' FY24 results, in which management indicated that newly opened stores had higher returns relative to the broader base of the store estate.
"This insight suggests that there remains the prospect of further productive growth in the store estate, which appears to be in contrast to the market concerns suggested by current valuation," said Berenberg.
"We have downgraded our forecasts by c4-6% at the adjusted operating profit level. These changes reflect a lowering of our FY 2025E LFL sales growth estimate as we now expect a more significant deterioration in volume from Q4 2024. We have also slightly increased our operating cost assumptions in FY 2026E and FY 2027E given headwinds from the approaching supply chain expansion."
Reporting by Iain Gilbert at Sharecast.com