Berenberg raises target price on Greggs

(Sharecast News) - Analysts at Berenberg hiked their target price on bakery chain Greggs from 2,200p to 2,300p on Thursday, citing strongerthanexpected trading in the third quarter and a modestly improved fullyear outlook.

Berenberg said Q3 likeforlike sales rose 3.4%, an acceleration from 2.1% in the first half, helping total sales grow 7.7% in the period. Better weather and successful new product launches supported the improvement, while management reiterated guidance for 100 to 110 net new stores this year. Berenberg upgraded its FY26 LFL growth assumption to 2.5% from 2.0%.

With cost guidance unchanged, the combination of firmer trading and continued cost control led the broker to raise its FY26 underlying earnings forecast by around 4%, though it remained cautious on FY27 given potential inflationary pressures across food, energy and wages.

The German bank also noted Greggs' newly announced restructuring proposals, which could see four sites close over 2.5 years and around 740 roles removed, with a cash cost of roughly £60m and expected pre-tax savings of £20m across FY28/29.

Berenberg lifted its FY26 earnings per share estimates by about 5%, while making only modest outeryear changes. It said Greggs now trades on 15x its updated earnings forecasts, with the broker highlighting longterm support from the storerollout programme, a 3.7% dividend yield and an anticipated rampup in free cash flow.

Reporting by Iain Gilbert at Sharecast.com