"Eating everyone's lunch." That's how Liberum has described Greggs PLC (LSE:GRG), the steak bake and sausage roll chain, in its report initiating coverage of the company.
The broker has given Greggs shares a 'buy' rating and a target price of 2,800p, stating that the company has emerged from the pandemic in a strong position.
With a repurposed supply chain to a food-to-go model, weaker competition, and more availability of space, the Newcastle-headquartered group has been able to broaden its menu and dayparts, as well as flex its digital strategy to attract more customers.
The report notes that Greggs' strategy is a threat to other quick service restaurant (QSR) players and that there are significant market share opportunities available.
Liberum expects it to double sales over the next five years, delivering margin benefits that are not reflected in current numbers. While Greggs' shares are not the cheapest, Liberum believes they deserve their premium rating.
Up 10% in the year to date, the shares advanced 2.7% on Tuesday to 2,622p.