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Panmure Liberum has raised its value goal on Greggs‘ (LSE:GRG) shares from 1,560p to 2,440p and upgraded them from Maintain to Purchase. That’s a 56% enhance in a single transfer, which is uncommon even by the requirements of UK mid-cap analysis.
When a dealer will increase a goal by greater than 50% in a single go, I don’t instantly hit the Purchase button. I begin asking questions.
The improve follows a powerful third-quarter replace, however Greggs’ shares have already moved sharply greater.
So the important thing query is easy: has the market already priced within the restoration?
Why Panmure Liberum turned bullish
The catalyst was Greggs’ Q3 buying and selling replace for the 13 weeks to 26 September. Whole gross sales rose 7.7%, whereas like-for-like gross sales at company-managed retailers elevated 3.4%. That’s a transparent enchancment from the two.1% like-for-like development recorded within the first half.
Administration stated buying and selling was supported by new merchandise and extra settled climate in August and September. Importantly, it additionally raised its full-year 2026 outlook, saying it now expects a “modestly improved” final result after stronger buying and selling and continued value management.
There’s additionally an effectivity story. The baker has proposed consolidating its manufacturing operations, with 4 websites doubtlessly closing and round 740 roles in danger. The corporate expects restructuring prices of about £60m, however annual financial savings of roughly £20m throughout 2028 and 2029.
Panmure Liberum’s argument is that Greggs is transferring from an earnings-downgrade cycle into an improve cycle. In plain English, the corporate has stopped disappointing buyers and began giving them causes to boost forecasts.
The dealer stated:
“With the corporate quickly pivoting from an earnings downgrade cycle to an improve cycle, alongside bettering money technology, we transfer again to purchase with a 2,440p goal value.”
That’s a compelling case. Nevertheless it isn’t the entire story.
Why some buyers stay cautious
Right here’s the contradiction. Deutsche Financial institution raised its Greggs goal from 1,330p to 1,420p, but stored a Promote score. In the meantime, the typical dealer goal is round 1,963p, beneath the share value of about 2,138p. The consensus score stays Maintain.
That tells me the market could already mirror a lot of the excellent news. Greggs has delivered a greater quarter, however its shares have rallied shortly. Shopping for after a powerful run means paying in the present day’s value for tomorrow’s execution.
There are actual dangers too. Administration’s flagged larger inflationary stress in 2027, which might squeeze margins. The £20m of annual financial savings are additionally nonetheless forward slightly than within the financial institution.
Lengthy story, brief? A 2,440p goal’s not a promise – it’s only one analyst’s estimate of what might occur if every little thing goes proper.
My take
Clearly, shopping for a inventory simply because one dealer upgraded it isn’t good. However on this case, the bull case for Greggs is credible: gross sales are bettering, steering has been raised and value motion might help income.
I’d say a wise strategy is to think about Greggs as a powerful watchlist candidate, slightly than an computerized purchase. Its upcoming full-year outcomes might give a greater concept whether or not this restoration is actual.
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Mark Hartley owns shares in Greggs.
