RBC Capital starts Greggs at 'outperform', says 'buy the dip'
RBC Capital Markets recommended that investors "buy the dip" on Friday, as it initiated coverage of bakery chain with an 'outperform' rating and 3,240p price target.
"With a recovering LFL exit rate in September and the group's ability to mitigate labour costs increases, we believe the shares have been oversold," it said.
"Cost pressures will grow, but we expect core customer wage increases and improving household finances to offset the vast majority."
RBC forecasts FY23-26 organic growth compound annual growth rate of around 11%, with a circa sever-year rollout, "keeping this high quality compounder firmly in growth territory, supporting a return to its historic multiple".
It said the 3,240p price target justifies an 'outperform' rating, with potential for further cash returns as capex eases.
At 1140 GMT, the shares were up 1.4% at 2,822p.
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