Andrew Wade, an analyst from Jefferies, maintained the Buy rating on Premier Foods. The associated price target remains the same with p230.00.
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Andrew Wade has given his Buy rating due to a combination of factors, primarily focusing on Premier Foods’ strategic acquisition of Merchant Gourmet. This acquisition is seen as a strong strategic fit, aligning with Premier Foods’ Branded Growth Model, which has been successful in the past. The purchase price of £48 million represents a 1.7x EV/sales multiple, and the expected EBITDA contribution post-synergies is projected to be between £5-6 million.
Merchant Gourmet, known for its premium and healthy meal options, complements Premier Foods’ existing portfolio and taps into trending health-conscious categories. The brand has demonstrated strong double-digit sales growth over the past two years and boasts high consumer repeat rates, indicating its potential for further scaling and value creation. These factors collectively underpin Wade’s confidence in Premier Foods’ ability to leverage this acquisition for future growth.