(Sharecast News) - Analysts at Berenberg raised their target price on bakery chain Greggs from 3,550.0p to 3,990.0p on Friday as it noted that customer appeal had broadened as its market share was expanding.

Berenberg noted that Greggs has made "encouraging progress" across multiple growth initiatives, which were now showing signs of success as the company's market share grows to an all-time high and benefits from a broader customer appeal.

The German bank, which reiterated its 'buy' rating on the stock, stated that Greggs has shown "resilient top-line growth" as it increasingly benefits from the introduction of evening sales and the expansion of its store estate, as well as delivery and loyalty/app improvements.

"We update our earnings forecasts to reflect slightly higher rates of revenue growth, which are more than offset by an increase in cost growth estimates. These changes reflect the company's FY 2023 results (reported on 5 March), and drive a respective 4% and 5% decline in our FY 2024E and FY 2025E adjusted-PBT forecasts versus our prior expectations," said Berenberg.

"We model LFL revenue growth of 8.5% yoy in H1 2024E and assume pricing equal to cost guidance (c4-5% yoy), before a slight reversion of revenue growth in H2 as pricing moderates. We increase our cost growth estimates to model flat profit before tax margins across FY 2024E to FY 2025E given the emergence of heightened labour costs, coupled with investment relating to newly introduced sites."













Reporting by Iain Gilbert at Sharecast.com