Citi downgrades Primark owner AB Foods to 'sell' from 'neutral'
By Michele Maatouk
Date: Thursday 16 Jan 2025
(Sharecast News) - Citi downgraded Primark owner Associated British Foods to 'sell' from 'neutral' and cut the price target to 1,770p from 2,400p.
The bank said that its FY25 and FY26 earnings per share estimates are 4% and 15% below Visible Alpha consensus.
"At Primark, we are cautious on the sales outlook (-4%/- 7% versus consensus), moderating expectations for space growth and LFLs as switching and audience overlap data suggest its value position is more at risk from online discounters and resale, and given our -0.4% 2025e UK HAC forecast," it said.
"Our proprietary analysis of Primark's gross margin leads us to forecast a -170 basis points drag in FY26e from USD strength.
"We see risks to growth and pricing power for ABF's UK food businesses (33% of total food) as UK food inflation accelerates in 2025e."
At 1250 GMT, the shares were down 2% at 1,944.50p.
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