- Associated British Foods
- 14 July 2025 11:01:19
Source: Sharecast
Panmure said earnings in the sugar division are volatile and have a disproportionate impact on ABF’s share price, which dissuades investors from buying the stock.
It argued that the sugar segment is a quality business that generates better returns than peers, but one that has material short-term earnings risks.
"We calculate that a carve-out of the ABF Sugar business could lead to an 13-15% higher value for shareholders, and a potential disposal could generate more," Panmure Liberum, said.
"However, we turn positive on ABF even with Sugar. We think the market underestimates the pace of recovery of Sugar profits, with actions already taken to address underperforming businesses."
Panmure also said the market underestimates the margin tailwinds at Primark, not just from FX but also efficiencies and operational leverage.
It forecasts a "potent" combination of 13% adjusted earnings per share compound annual growth rate over FY’25-28E, with around 7% per annum in dividends and buybacks.
At 1100 BST, the shares were up 3.6% at 2,121p.