Deutsche Bank raises target price on AB Foods

Analysts at Deutsche Bank raised their target price on Associated British Foods from 2,180.0p to 2,300.0p on Tuesday, stating its Primark unit had driven "another upgrade".

Deutsche Bank said AB Foods' recent pre-close trading update reinforced its "positive view" on the stock, with a better Primark sales and margin performance and robust performance across its food businesses - more than offsetting a weaker sugar performance.

The German bank stated ABF's upgrade to underlying earnings and earnings per share guidance saw "a more muted investor reaction" than it had expected, which reflects "improved expectations across the street".

"AB Foods remains one of our top picks in the European retail space given the strong Primark LFL, new space and margin recovery in addition to the robust food businesses performance and benefit from £500.0m share buyback," said DB, which stood by its 'buy' rating on the stock.

"Trading on circa 14.5x price-to-earnings for circa 15% earnings per share growth in FY24e, we believe the risk/reward is skewed to the upside."

Reporting by Iain Gilbert at Sharecast.com