GRG: Margin Resilience Will Support Upside As Store Expansion Accelerates

Analysts have trimmed their price target on Greggs to approximately £19.43 from about £19.46, reflecting slightly higher long term revenue growth and margin expectations, but a modestly lower valuation multiple in light of recent target reductions across the Street.

Analyst Commentary

Recent target revisions indicate that bullish analysts remain constructive on Greggs despite trimming their price objectives. This reflects a view that the long term growth story and margin progression are intact but warrant a slightly lower multiple amid a more cautious sector backdrop.

Bullish Takeaways

• Bullish analysts maintain positive ratings even after lowering price targets, signaling confidence in the company’s underlying earnings trajectory and market positioning.
• Targets remain well above the current share price, implying upside potential as management executes on store expansion, product innovation, and digital initiatives.
• Ongoing top line growth and resilient customer demand are viewed as key supports for margin improvement over the medium term, helping to justify premium valuation versus some peers.
• The balance between value offerings and brand strength is seen as a competitive advantage that can sustain traffic and pricing power through economic cycles.

Bearish Takeaways

• Bearish analysts highlight that the magnitude of recent target cuts suggests some de rating risk if growth slows or cost pressures persist more than expected.
• There is caution that execution missteps in store rollout, supply chain, or digital could cap near term earnings momentum and limit multiple expansion.
• Visibility on margin upside is viewed as more constrained given wage and input cost inflation, raising questions about how quickly profitability can scale.
• Some observers see the current valuation leaving less room for error if like for like sales growth moderates from recent elevated levels.

What's in the News

• Planning around 120 net shop openings in 2025, supported by a strong pipeline into the fourth quarter and 2026, which signals continued store rollout momentum and confidence in demand (company announcement).

Valuation Changes

• Fair Value Estimate edged down slightly to approximately £19.43 from about £19.46 per share, reflecting a marginally lower valuation despite improved fundamentals.
• Discount Rate decreased slightly to around 9.31 percent from roughly 9.33 percent, indicating a modest reduction in perceived risk or cost of capital.
• Revenue Growth has risen slightly to about 7.44 percent from roughly 7.33 percent, pointing to a marginally stronger long term top line outlook.
• Net Profit Margin improved slightly to around 5.44 percent from approximately 5.38 percent, indicating a small upgrade to expected profitability.
• Future P/E fell modestly to roughly 18.43x from about 18.74x, suggesting a slightly lower valuation multiple applied to forward earnings.