Associated British Foods PLC (LSE:ABF) has its target price cut and been downgraded to 'hold' by Deutsche Bank, with the analysts suggesting it is a “hard investment case” in the short term.
Deutsche Bank said it has more certainty on margin declines and less certainty on sales development, hence cutting its target price from 2300p to 1900p.
The broker also suggests that the argument of trading down during times of inflation put forward by management has little evidence to suggest this will be true.
Price increases in grocery have failed to keep pace with input costs and energy inflation.
Primark may be the saving grace, with Deutsche Bank suggesting price hikes might here offset gross margin headwinds.