- Associated British Foods
- 10 September 2025 11:29:16
Source: Sharecast
The broker, which retained a 'buy' stance on the shares despite the market's negative reaction, said that while this year has created "notable bumps in the road", the long-term investment view for ABF still remains positive and "a smoother surface should benefit shareholders in FY26 and thereafter".
Nevertheless, the stock dropped 10% after the company reported a weaker performance in its sugar division and muted growth at Primark, as well as a £200m impairment charge to close its Vivergo bioethanol plant and restructure its Spanish sugar business.
Shore Capital said that results for the year to 13 September are likely to be weaker than anticipated, and forecasts will have to be "nudged down".
"On c11-12x FY26F PER, we still feel that there is much to like about ABF's equity - values, relevance, balance sheet and opportunities - but for shareholders to be rewarded on an ongoing basis, it needs to deliver sequential earnings progress to us," Shore Capital said.
"When the stars align across ABF's divisions, it is a most compelling entity from earnings, cash generation and returns perspectives. Alas [...] there have been some deceleration to progress in recent times, challenging the galactic alignment but not the wider long-term thesis, all predicated upon a strong balance sheet in our view."
By 1009 BST, the stock was down 10.4% at 2,007p.