Greggs share price falls after City broker says ‘sell’
Greggs’ share price has fallen nearly four per cent after a leading City broker downgraded its rating for the high street chain to ‘Sell’.
Panmure Liberum analysts suggested that Greggs’ time of ‘supernormal’ growth – sales rose by nearly 20 per cent in 2023 – may be over.
Analysts suggested that Greggs’ roll-out of evening trade to boost growth may hurt the bakery, with evening trade already “waning” despite it being “crucial for driving the required profit uplift”.
“We query whether it is resonating with customers in a highly competitive market,” analysts added.
Longer opening hours form part of chief Roisin Currie’s strategic growth plan for the brand, which will also see continued menu expansion.
Panmure Liberum downgraded its forecast for profit before tax by six per cent in 2025 and 10 per cent in 2026.
It reduced its target price for the stock from 3,300p to 1,733p, adding that a dividend cut may be required if sales drop even a few per cent this year. The stock is currently worth 2,126p per share.
Greggs’ share price fell 12 per cent on January 9 after a slightly-softer-than-expected set of results and talk of lower footfall from boss Roisin Currie.
Equity Analyst at Shore Capital, Darren Shirley, said at the time Greggs “was not immune” from the gloom surrounding the UK retail sector.
“Management talks of consumer confidence being subdued through [the second half of] 2024, which weighed on industry-wide customer visits and expenditures,” Shirley added.
However, senior investment manager at RBC Brewin Dolphin John Moore said there are “reasons to be optimistic despite the headwinds”.
“Greggs has proven its ability to navigate tricky times in the past… [It has] cash on its balance sheet, great brand awareness, and an entrepreneurial management team,” he said.