Ex-growth Greggs' valuation chopped by leading investment bank
Published: 15:11 06 Mar 2025 GMT
Deutsche Bank has cut its price target for Greggs PLC (LSE:GRG) from 2000p to 1330p and reiterated its ‘sell’ rating, arguing that the bakery chain has gone ex-growth.
The bank warns that Greggs faces a period of slowing like-for-like sales, rising costs, and ongoing margin pressure as it ramps up production at two new sites in the Midlands.
Despite the company’s long-term expansion strategy, Deutsche sees limited earnings growth in the medium term, with profitability unlikely to return to 2024 levels before the end of the decade.
Higher labour and food costs, combined with increased interest expenses, are further weighing on its outlook.
Greggs’ valuation has now been revised down to reflect these challenges, with Deutsche applying a multiple of 12 times its forecast earnings per share, in line with a lower-growth peer group.
The new 1330p price target suggests nearly 25% downside from the current share price, reinforcing the bank’s bearish stance on the stock.
In afternoon trading, the stock was off 2.6% at 1,769p.
