Update shared on 06 Nov 2025
Fair value Increased 2.91%Analysts have raised their fair value estimate for Associated British Foods by approximately £0.64 to £22.46 per share. This change reflects increased optimism around revenue growth potential and the possibility of a Primark business separation.
Analyst Commentary
Recent analyst activity on Associated British Foods reflects a divergence of opinion regarding the company's valuation prospects, business segmentation, and consumer outlook.
Bullish Takeaways- Bullish analysts cite the potential separation of the Primark business as a key driver of future share price appreciation, unlocking additional value for shareholders.
- Raised price targets among bullish commentators indicate growing confidence in the company’s ability to deliver revenue growth and strategic execution.
- There is growing optimism around the possibility of structural changes within the group, which could enhance operational focus and market positioning.
- Bullish forecasts suggest that the company’s fundamentals remain strong despite challenges in the broader retail environment.
- Bearish analysts have expressed concerns about the outlook for UK consumers and take a more cautious view on demand trends that could weigh on earnings growth.
- Reductions in price targets reflect skepticism around the pace and sustainability of revenue expansion in the current market.
- Some analysts see limited upside potential given macroeconomic headwinds and possible execution risks tied to restructuring initiatives.
- Bearish perspectives highlight that, despite restructuring opportunities, uncertainties remain over the effectiveness and timing of these strategic moves.
What's in the News
- Citi analyst Monique Pollard raised the price target on AB Foods to 1,830 GBp from 1,770 GBp and maintained a Sell rating (Periodical).
- Associated British Foods is reviewing its group structure. Consideration is being given to spinning off Primark as a separately listed company on the London Stock Exchange, a move that could boost London's financial markets (Key Development).
- The company completed a significant share buyback, repurchasing 24,276,007 shares for £500 million under its ongoing program (Key Development).
- Expansion efforts continued with 15 new stores opened in the second half of the year across the US, Europe, and the UK. Preparations are also underway for franchise openings in the Middle East beginning in 2025 (Key Development).
Valuation Changes
- Fair Value Estimate has risen slightly from £21.83 to £22.46 per share, reflecting enhanced revenue forecasts.
- The Discount Rate increased from 6.82% to 7.07%, indicating a marginally higher perceived risk in the valuation model.
- Revenue Growth projections improved from 2.50% to 3.07%, suggesting greater confidence in future sales expansion.
- Net Profit Margin forecast declined from 7.00% to 6.68%, pointing to slightly lower profit expectations relative to revenue.
- The future P/E ratio edged up from 12.59x to 12.98x, signalling modestly higher future earnings multiples being applied.
Disclaimer
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