Premier Foods Shares Expected to Rise: Here’s Why

Premier Foods (LON: PFD) shares were given a boost this week after Barclays upgraded the stock from Equal-Weight to Overweight, suggesting that the company's shares are poised for a significant rise.

Analyst analyst Patrick Folan set a price target of 207p per share for Premier Foods, up from 143p.

According to Folan, the recent decline in UK food inflation has led to a positive inflection in grocery food volumes over the past six months.

“UK grocery volumes are so back,” he declared. “With UK food inflation ticking lower (particularly ambient food), grocery food volumes have been inflecting for the last six months, reaching +1.5% in September.”

The trend is expected to be reflected in the company's first-half 2025 results, which are due on November 14, 2024.

The analyst believes Premier Foods is well-positioned to capitalize on improving market dynamics.

He explains that the company's strategic initiatives, including increased promotional activity, new category expansion, international expansion, and recent mergers and acquisitions, are expected to drive volume growth and support organic sales growth of 3-4% going forward.

Folan's upgrade of Premier Foods is said to align with the positive sentiment in the UK food sector.

The bank notes that companies such as Greencore, Cranswick, and Tesco have also reported strong volume growth and improved performance, indicating a favorable market environment for Premier Foods.

“These performances indicate a strong read-across for Premier Food considering c94% of group sales are in the UK market where volume delivery has been quite strong and Premier's skew to selling mainly ambient food in the grocery channel,” concludes Barclays.

Premier Foods shares are up around 39.8% this year, gaining over 6% in the last month. The stock has also performed well over the last 12 months, climbing 57%.