Broker tips: Aberdeen, Greggs

Jefferies upgraded Aberdeen on Thursday to 'buy' from 'hold' and lifted the price target to 215.0p from 140.0p following the company's full-year results earlier in the week.
On Tuesday, the asset manager said it was putting the missing vowels back into its name after a widely-mocked rebrand to Abrdn four years ago, as it reported a swing into the black.

"The positive reaction to the good FY24 results, encouraging and realistic 2026 targets and the use of the DB surplus to help fund some DC obligations was probably amplified by short covering," Jefferies said. "Nevertheless, we increase our PT to 215.0p on our new forecasts and higher multiples ascribed to the operating segments."

The bank also said it can see Aberdeen return to growth, underpinned by Interactive Investor in the near term.

"The cosmetic change to the name is welcome too, upgrade to buy," it said.

Analysts at Berenberg lowered their target price on bakery chain Greggs from 3,420.0p to 3,250.0p on Thursday following the group's FY24 earnings earlier in the week.

Berenberg reckons Greggs' longer-term opportunity remains intact despite a cyclical headwind to life-for-like sales growth at present, noting that pressures that have driven a deceleration in sales growth were "both cyclical and industry-wide", rather than company-specific issues associated with the store estate reaching or nearing saturation point.

The German bank, which reiterated its 'buy' rating on the stock, said its conviction in its stance was enhanced by Greggs' FY24 results, in which management indicated that newly opened stores had higher returns relative to the broader base of the store estate.

"This insight suggests that there remains the prospect of further productive growth in the store estate, which appears to be in contrast to the market concerns suggested by current valuation," said Berenberg.

"We have downgraded our forecasts by circa 4-6% at the adjusted operating profit level. These changes reflect a lowering of our FY 2025E LFL sales growth estimate as we now expect a more significant deterioration in volume from Q4 2024. We have also slightly increased our operating cost assumptions in FY 2026E and FY 2027E given headwinds from the approaching supply chain expansion."