Associated British Foods PLC (LSE:ABF) has taken another knock to earnings forecasts, but analysts at Shore Capital are holding their nerve.
The broker has trimmed profit estimates again after a cautious trading update, cutting fiscal 2026 earnings per share by around 5% and nudging down 2025 forecasts too.
Even so, it is sticking with a 'buy' call, arguing that the group’s mix of businesses, strong balance sheet and long-term investment case remain intact despite a tough year.
The drag is familiar. Sugar, already flagged for a £40 million loss this year, faces a longer wait for recovery as Europe works through heavy stocks.
ABF’s new mill in Tanzania should help in 2026, but not soon enough to shift the dial. Agriculture has been hit by a dry British summer, while Allied Bakeries continues to bleed cash as the Competition and Markets Authority grinds through its review of the bread sector. Shore calls the CMA’s year-long timetable “more broken Britain”.
Grocery is also being cut back, with US businesses coming off peak levels and Ovaltine squeezed by chocolate inflation.
Primark is proving steadier, with flat trading year on year, but management remains wary of shoppers in the UK and continental Europe. Ingredients is the only division seeing upgrades, with earnings lifted slightly thanks to steady demand.
In numbers, Shore now sees 2025 earnings per share of 170.4p, a 14% fall on last year, and 2026 at 187.5p, implying 10% growth but still below 2024 levels.
That leaves the stock on 10.6 times 2026 earnings, a valuation the broker describes as “not especially demanding”. Dividends are forecast to resume growth in 2026 with a payout of nearly 70p, equivalent to a yield of 3.5%.
The frustration is clear. ABF shares have underperformed the FTSE 100 by 14% this year, reflecting weak sentiment around consumer spending and commodities.
Yet Shore stresses the positives: a well-invested estate, strong financial discipline and the prospect of synergies if Allied is allowed to merge with another bread business. It sees “latent potential” in the group, with scope for earnings and cash flow to improve beyond 2026.
For now, though, the bruises show. Shore Capital keeps its “buy” rating, but admits it is a “somewhat bruised” stance. Sub-2,000p, the stock offers value, even if patience will be needed for the stars to align.
The shares were down 1.4% at 1,973.9p in afternoon trading.