Howard Whitman reiterates 'buy' on Greencore after meeting with CFO

Howard Whitman reiterated its ‘buy’ rating and 310p price target on Greencore following a meeting with the company’s chief financial officer on Tuesday.

It said key messages included a positive outlook for UK Food to Go, sustained momentum within the incumbent US business – notable accounts include 7-Eleven and Starbucks – and positive expectations for the newly acquired Peacock Foods.

“The company appears well placed to perform positively in FY2017,” the brokerage said.

On 14 November, Greencore announced the planned acquisition of US-based convenience food business Peacock Foods and a rights issue.

In light of this, Howard Whitman has taken the opportunity to update its forecasts. It noted the first full year of the merger will be 2018, with Greencore’s US business set to grow four-fold, rising from 15% of group sales to 45%. Meanwhile, synergies should kick in in 2018 also, with only very few to be felt in FY17.

Howard Whitman upped its forecasts for 2017 revenue by 63.4% to £2.5bn and for earnings before interest and tax by 31.2% to £139m.

For 2018, it lifted its revenue forecast by 80.7% to £2.85bn and its EBIT estimate by 55.1% to £177m.

At 1115 GMT, Greencore shares were up 3% to 245.10p.