Analysts at Barclays believes ABF share price set to trade higher

Analysts at the UK lender remain optimistic about the British food processing and retailing company as lockdown measures begin to ease and allow the group to reopen Primark stores.

Analysts at Barclays remain optimistic about Associated British Foods (ABF) ahead of its latest trading update on Thursday with lockdown measures beginning to ease, allowing the group to reopen its Primark stores.

Barclays reiterated its ‘overweight’ rating for the stock and issued a target price of £23 per share – implying a potential upside of 19.9%.

ABF closed at £19.18 per share on Tuesday, with the stock down 25% year-to-date

Associated British Foods shares trade lower as second wave fears mount

ABF shares briefly recovered in mid-June after the UK government began to ease lockdown restrictions that permitted the company to reopen its popular Primark retail stores.

‘Trading in our re-opened stores has been both reassuring and encouraging, with customer queues outside most stores and, once in store, spending on larger basket sizes,’ the company said.

However, the rally was short-lived with investors growing increasingly concerned about a second wave of coronavirus cases, with the company’s earlier gains being completely eroded.

The group has always had a strong financial constitution and this update suggests sound liquidity and strong solvency to us, according to analysts at Short Capital in a note to investors.

‘The easing of Primark's restrictions with trade returning at quite satisfactory initial levels, albeit is too early to really make sensible comment, but also the better than guided cost outcome, shows good and hard work by the team's involved, in our view,’ the broker said.

‘The one key question to us for Primark from this recent experience is whether or not it leads to an adjustment in its online strategy; where partnerships maybe be a worthwhile move, especially if full and partial lockdowns are part of future life; Primark's store only model in this respect has been a strategic challenge,’ Shore Capital analysts added.

Associated British Foods: Technical Analysis

Associated British Foods has continued to hold above the 50-day SMA (£18.66), holding a zone of support that has been in place since the middle of June, according to Chris Beauchamp, chief market analyst at IG.

‘Trendline resistance from the June peak above £21 has held back progress, but a break above £19.40 would likely signal that the move higher is firmly underway,’ Beauchamp said. ‘This would then bring £20 into view, followed up by the June peak at £21.40.’

‘A more bearish view might develop with a move below £18.40, bringing the May lows at £16.15 into play,’ he added.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

See opportunity on a stock?

Don’t miss your chance. Try a risk-free trade in your demo account, and find out whether your hunch could have paid off.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance. Upgrade to a live account to take advantage.

  • Trade a wide range of popular global stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform, when it matters

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Sell
Buy
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.