Michele Maatouk Sharecast News
13 Dec, 2024 11:45

RBC Capital starts Greggs at ‘outperform’, says ‘buy the dip’

dl greggs bakery shop sign
GreggsSharecast photo / Josh White

Greggs

2,840.00p

14:44 13/12/24
2.08%
58.00p

RBC Capital Markets recommended that investors "buy the dip" on Friday, as it initiated coverage of bakery chain Greggs with an ‘outperform’ rating and 3,240p price target.

Food & Drug Retailers

4,526.53

14:45 13/12/24
0.21%
9.40

FTSE 250

20,925.73

14:45 13/12/24
n/a
n/a

FTSE 350

4,579.77

14:45 13/12/24
n/a
n/a

FTSE All-Share

4,535.94

14:45 13/12/24
n/a
n/a

"With a recovering LFL exit rate in September and the group's ability to mitigate labour costs increases, we believe the shares have been oversold," it said.

"Cost pressures will grow, but we expect core customer wage increases and improving household finances to offset the vast majority."

RBC forecasts FY23-26 organic growth compound annual growth rate of around 11%, with a circa sever-year rollout, "keeping this high quality compounder firmly in growth territory, supporting a return to its historic multiple".

It said the 3,240p price target justifies an ‘outperform’ rating, with potential for further cash returns as capex eases.

At 1140 GMT, the shares were up 1.4% at 2,822p.

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