Numis raises Cranswick's target price after trading update

Cranswick’s target price was lifted by Numis to 2,202p from 1,900p after the food producer reported a pre-close trading update.

The company said on Tuesday that it will report a trading performance for the year to the end of March in line with its expectations following continued positive trading in the final quarter of the year.

Cranswick, which is due to release its full year results on 24 May, said total full year sales volumes were 12% higher than the previous year.

Full year underlying sales volumes rose 10%, with corresponding revenues up 5% as customers and UK consumers benefited from lower pork prices.

“The impression gained post the third quarter update was that there was a desire to sustain the 10% like-for-like increase for volume for the entire full year, despite the tougher comparative in the fourth quarter. This has been achieved, with the exit run rate indicated to have been good too,” Numis said.

Cranswick said it invested well in excess of £30m across its asset base in the last financial year to support future growth and drive further operating efficiencies – a level of investment that is expected to continue through the current year.

The company said it was “in a strong financial position”, with committed, unsecured facilities of £120m “which provide comfortable headroom”.

“The shares trade on a far higher than usual rating, so good news was discounted and we are projecting pre-tax profit of £69.8m for this full year” whereas as per Fidessa most estimates are in the £66.4-68.1m range,” Numis said.

“Low pig meat prices may not last forever too, although this is a strongly-managed concern with a 25- year dividend growth record and a history of successful ‘buy and build’ deals.”

Numis reiterated it's 'hold' rating for the stocks.

Shares climbed 0.14% to 2,161p at 1031 BST.