Deutsche Bank has upgraded Associated British Foods PLC (LSE:ABF) from 'sell' to 'hold', saying the recent slide in the shares has priced in key risks around its Primark and sugar businesses.
In a note to clients, analyst Adam Cochrane said the stock had dropped around 15% since its August peak, reflecting market concerns about sluggish like-for-like sales at Primark, falling sugar profits and pressure on grocery margins, all of which were flagged in the company’s recent pre-close update.
"Accordingly the valuation now appropriately reflects the downside risk that we saw in our downgrade note at the tail end of August," he wrote.
While Deutsche continues to see challenges for the fast fashion retailer, including how to reignite growth in Primark’s sales, it no longer believes there is significant further downside in the near term.
“We do not see profitability as having an immediate leg down although some concerns remain with regards Primark LFL and how this can be improved,” Cochrane added.
Deutsche has trimmed its earnings per share forecasts by around 1% to 3% for the next three years and cut its price target to 2,000p from 2,130p.
That’s still slightly above the current price of 1,990p, with the shares now trading on roughly 10.5 times estimated 2026 earnings.