Greggs Share Price: Can Upcoming Update Spark Another Rally?

Greggs (LON: GRG), the popular British bakery chain, has enjoyed a period of strong performance. But can they maintain this momentum? The company is set to report a trading update on Tuesday, May 14.

Analysts and investors hope the update can provide another boost to Greggs' share price, which drifted slightly lower between March and April. Even so, the stock is up 10.5% this year and over 5% in the last three months. 

Greggs, in its full-year 2023 results, reported a strong start to 2024. The company's like-for-like sales in company-managed shops grew by an impressive 8.2% in the first nine weeks, indicating a robust performance. 

The company also stated that inflationary pressures were reducing, improving the visibility of its costs in the coming year. 

“We are confident that Greggs can deliver another year of good progress as we continue our plans for sustainable growth,” the company said. 

Following those results, analysts at Edison said the second full year of Greggs' five-year growth plan to double revenue by FY26 should be marked down as very successful, “especially so given the challenging external environment.”

In addition, the firm said it is looking for more of the same in 2024, “which will be a significant year from a capital investment perspective and beyond.”

“We forecast Greggs will continue to generate strong growth over the next three years, with CAGRs for revenue and operating profit for FY24–26 of 11% and 10%, respectively,” added Edison. 

Meanwhile, Deutsche Bank initiated Greggs with a Hold rating and a 2,600p price target in a recent note. The bank was more downbeat on the stock, saying it thinks delivery and evening delivery targets are more challenging given the perceived product offering and the long-established competition in these markets.

Looking ahead to Tuesday, investors will be watching for any confirmation of strong like-for-like sales growth, any comments from management on inflation and costs, the company's capital investment plans, and any potential changes to its full-year outlook.