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Performance Concerns Lead to Lowered Forecasts
Associated British Foods PLC (OTC:ASBFY), the owner of Primark, encountered a setback on Friday following a revision of expectations by Deutsche Bank. This update came after ABF issued a warning on Thursday highlighting weaker-than-anticipated performance.
Primark’s sales showed a decline on a like-for-like basis for the first half of the year, and profits from the company’s sugar business also fell short of forecasts. Deutsche Bank noted that the disappointing performance at Primark is a primary concern for market participants, contributing to ongoing uncertainty surrounding the stock.
Revised Earnings Forecasts and Share Price Target
As a result of the updated information, Deutsche Bank has reiterated its ‘sell’ rating on ABF and adjusted its pre-tax earnings forecasts downward for the next three years. The bank also revised its share price target for the company, lowering it from 2,190p to 2,130p.
Deutsche Bank emphasized the need for observable improvement in Primark’s like-for-like sales performance. Without signs of a recovery, the bank believes that additional investment in the brand may be necessary to stimulate sales growth.
Market Reaction
Following the announcement, ABF’s share price decreased by 1.9% to 2,245p on Friday, continuing a downward trend that began the previous day. The market response reflects the increased caution among stakeholders in light of the recent performance updates and revised forecasts.
