RBC Capital Markets upgrades AB Foods to 'outperform'

RBC Capital Markets upgraded Primark owner Associated British Foods on Tuesday to ‘outperform’ from ‘sector perform’ and lifted the price target to 2,250p from 2,150p.

RBC said it thinks an improvement in Primark profitability should drive double-digit earnings growth for ABF, which is not being captured by the current valuation.

It noted that ABF trades at less than 13x CY24 estimated earnings per share, with over 80% of earnings coming from Primark, Twinings/Ovaltine and the ingredients business.