Barclays raised its rating to ‘overweight’ from ‘equal-weight’ and lifted its target price to 3,380p from 3,290p
“We consider Primark in the US to be as differentiated and disruptive a model as it is in the UK and Europe, and ultimately well placed to take share profitably in the large, fragmented US market,” the bank said.
“We believe Primark can build a US business the size of Europe today in 5-10 years,” it added.
The remarks come despite ABF warning late last year that it plans to reduce the size of three of its Primark stores in the US this year.
US retailers have come under pressure from a trend of heavy discounting to attract customers in a competitive market.
“US fast fashion remains under developed whilst value is also making ground,” said Barclays.
“Adjustments to the real estate structure should enable more consistent densities and store profitability closer to Boston, opening the door to further expansion.
“With greater availability of space and less restrictive opening logistics (vs Europe), US rollout should accelerate the total space growth profile.”
In Continental Europe, Barclays expects mid-term space growth of 10% and believes “the long term high visibility structural growth story remains intact”.
France and Italy have just 15 stores, compared to 182 in the UK. Spain, as the most mature market, can still double from here, Barclays said.
Overall, it sees ABF as a “good manager” of its portfolio of assets with a focus on long term cash generation and return on invested capital.
Shares rose 2.1% to 2,890p in early trading.