Richard Edwards, an analyst from Goldman Sachs, maintained the Sell rating on Associated British Foods. The associated price target was lowered to p1,750.00.
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Richard Edwards has given his Sell rating due to a combination of factors that, in his view, materially weaken the investment case for Associated British Foods. He highlights that Primark’s like-for-like sales have been trending down for most of the past decade (excluding the COVID years), which he sees as evidence of persistent structural headwinds, including a consumer shift to online shopping and intensifying price competition from low-cost international players and discount formats. In response, he expects ABF will need to step up spending on areas such as product proposition, value perception, and digital engagement, which should help to stabilise Primark’s sales only by FY27 but at the cost of constraining any meaningful rebound in profitability.
At the same time, Edwards points to softer demand trends in the Grocery and Ingredients divisions, which further depress the group’s earnings outlook. Reflecting these pressures, he has cut his FY26 and FY27 earnings-per-share forecasts by low double-digit percentages and now anticipates a lower EBIT margin for Primark than previously expected. These forecast reductions lead him to lower his target price to 1,750p from 2,300p, implying around 5% downside from current levels compared with notable upside for the broader sector. Given this relative underperformance potential and the combination of cyclical and structural challenges, he concludes that the risk/reward profile justifies a Sell recommendation on the stock.
In another report released on January 13, Morgan Stanley also maintained a Sell rating on the stock with a p1,650.00 price target.