JP Morgan has initiated coverage of Greggs PLC (LSE:GRG) with an “overweight” rating and a price target of 2,110p by December 2027, suggesting around 35% upside from current levels.The shares rose 6% to 1,680p.
The bank said the bakery chain is a “structural winner” in the UK consumer landscape, citing strong operational metrics across its estate.
“Our proprietary benchmarking analysis suggests Greggs is a structural winner,” analyst Borja Olcese wrote, highlighting “top-class unit economics such as gross profit per square foot, underlying profit per square foot, revenue per operating lease, and gross profit per operating lease”.
JP Morgan believes the shares offer an “asymmetric risk-reward”, with the company trading on trough valuation multiples while approaching the bottom of its earnings cycle. The bank’s bull case scenario implies up to 55% upside potential.
It also pointed to the prospect of a re-rating driven by several factors, including stronger-than-expected like-for-like sales and earnings momentum from the 2026 financial year. An inflection in free cash flow and the potential for capital returns are also seen as catalysts.
The report positions Greggs as well placed to benefit from improving consumer conditions and operational leverage, with JP Morgan arguing that the current valuation does not reflect its long-term growth and profitability profile.