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(Sharecast News) - Shore Capital downgraded Associated British Foods on Friday to 'hold' from 'buy' after the Primark owner's profit warning a day earlier.
AB Foods cut its profit outlook on Thursday due to weaker performances at its Primark retail chain and US foods operations.
Shore Capital said Primark has faced challenging market conditions across Continental Europe, whilst also reporting some difficult trading patterns in US Grocery & Ingredients too.
"Sugar expectations are unchanged. Adjusted EBIT and EPS are guided below the FY25 out-turn, making for a notable downgrade to our estimates," the broker said.
"We cut our FY26F EPS by circa 11% to 161.7p. Following this disappointing update, we believe it is sensible to temper our positive stance on ABF stock to a hold position, noting we see a lot to like about the ABF business, but also need to understand and see how trading ultimately settles."
Berenberg upgraded Marks & Spencer to 'buy' from 'hold' and nudged up the price target to 415p from 412p.
The bank said share price weakness in November and December has brought the forward price-to-earnings valuation (to March 2027E) down to a "relatively attractive" 10x.
"At the same time, we expect a sales recovery in the Fashion, Beauty & Home division next year (FY 2027E, to March 2027) following the cyberattack disruption that the company suffered in 2025, while the underlying trajectory in Food sales remains strong," it said.
Berenberg estimated that M&S will achieve free cash flow of more than 400m from FY 2027E and said that this could underpin an improvement in the dividend to a yield in the 3-4% range.
It said the retailer's ongoing focus on product appeal through value-for-money pricing, quality and style could drive continued like-for-like sales growth and market share gains.
"The pace of food innovation shows no sign of slowing down, with the launch of new ranges, such as nutrient-dense food aimed at those taking GLP-1 medications, products aimed at gut health and reformulations designed to appeal to customers avoiding ultra-processed foods," it said.
"Increasing GLP-1 medication use could also benefit M&S as a mid-market clothing retailer, as consumers seek reasonably priced clothing in smaller sizes, as we discussed in our recent Apparel Price Survey and market themes report. In addition, International and Ocado sales trends seem to be heading in the right direction, in our view."
Elsewhere, JPMorgan lifted its price target on Prudential to 1,500p from 1,325p and reiterated its 'overweight' rating as it said its analysis suggests there could be a lot more to go for in the shares, despite the near 80% gain in 2025.
The target price increase follows the partial disposal of Prudential's stake in ICICI Prudential Asset Management in India (IPAMC), JPM said.
"We continue to see a positive fundamental investment thesis in the shares, with a flywheel of strong new business profit growth driving attractive growth in earnings and cash flow, and ultimately capital returns."