Cranswick a 'buy' after profits jump in first half, Investec says

Cranswick’s shares jumped as Investec reiterated its ‘buy’ rating on the stock and raised its target price to 1890p from 1870p after the food producer reported a 22% increase in first half adjusted profits to £31.5m.

The company, which supplies sausages to Tesco and Sainsbury's under their own label lines, said revenue gained almost 10% to £529m, higher than management expectations. Revenues were supported by an improvement in volumes and margins.

“With over 20% profit growth delivered in 1H, Cranswick continues to be a key stock pick for us,” said Investec analyst Nicola Mallard.

“We expect growth to be largely first half-led this year, given a tougher margin comparisons in the second half, but still see solid volume progress continuing in the second half of 2016 and beyond. We upgrade full year estimates for 2016 and 2017 pre-tax profit by 3% and our target price increases by 1%.”

Shares rose 3.8% to 1,764.60p at 1020 GMT.