Key points:
- ABF shares were downgraded on Friday
- Its stock fell over 2.5%
- Most analysts have a Hold rating on ABF shares
Associated British Foods (LON: ABF) shares declined on Friday (up 0.22% Monday morning), opening lower and falling more than 2.5% following a downgrade from HSBC.
In a note to investors, HSBC analyst Paul Rossington downgraded the Primark Owner’s shares to Hold from Buy, cutting the price target to 1,375p from 2,095p per share.
The analyst explained that European apparel retailers are facing multiple headwinds, such as the potential impact of inflationary cost pressures on consumer demand and the potential impact on demand from higher interest rates via mortgage payments.
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So far this year, the share price of many apparel retailers has plummeted. It is especially true of mainly online retailers such as Boohoo and ASOS, who are down over 66% and 76%, respectively, in 2022.
However, Rossington did note that so far, apparel demand in the UK has held up better than in other European markets.
In 2022, Associated British Foods shares are down 34.5%, while in the last 12 months, they have fallen 25%. Still, over the last month, the stock has managed to climb 5%.
The international food, ingredients, and retail group was also downgraded to Neutral from Buy at UBS in September. The firm’s analyst Sreedhar Mahamkali also cut the firm’s price target on the stock to 1,450p from 2,300p, stating in a note that he saw little near-term share upside in ABF shares. He added at the time that he sees ABF shares performing in line with the market until there's “evidence of some progress on sales/margin trends.”
Overall, according to TipRanks, out of 14 analyst ratings, two view the stock as a Buy, 11 as a Hold, and one as a Sell. The average price target is 1,536.92p, suggesting a potential 15% upside.
