Greggs Shares (GRG) Make 5-Year Low As Bearish Sentiment Continues

Greggs plc (LON:GRG) shares have tumbled to a new five-year low, reflecting persistent bearish sentiment and a confluence of negative factors impacting investor confidence. The stock closed at 1,417p, a 2.28% decrease on the day, signalling continued challenges for the bakery chain.

The recent downturn extends a year-to-date decline of 49.57%, highlighting the struggle for bullish investors to find support. The share price action reflects concerns about slowing sales growth, analyst downgrades, and broader operational challenges. The stock has been under sustained pressure, struggling to maintain gains amidst the negative headwinds.

Contributing to the downward pressure, several analysts have revised their price targets for Greggs. Berenberg Bank lowered its price target from 3,060p to 2,640p, maintaining a “buy” rating despite acknowledging volatility in like-for-like sales and a 5% downgrade in consensus expectations for FY25 adjusted operating profits.

Similarly, Jefferies Financial Group reduced its price target from 2,650p to 2,500p, also retaining a “buy” rating. Deutsche Bank Aktiengesellschaft holds a more pessimistic view, maintaining a “sell” rating with a price target of 1,330p. These revised expectations reflect a recalibration of future performance potential.

Operationally, Greggs is navigating a complex environment, including the impact of adverse weather and economic uncertainties. The company previously indicated it had no plans for further price increases, despite a slowdown in sales growth attributed to damp weather and prevailing economic uncertainty.

Cost inflation, particularly wage increases, is expected to be at the lower end of the anticipated 4% to 5% range, offering a slight buffer against margin erosion.

The combination of analyst downgrades, slowing sales growth, profit warnings, and ongoing operational challenges has collectively eroded investor sentiment, contributing to the significant decline in Greggs' share price. While the company has achieved notable milestones, the prevailing market conditions and cautious outlook continue to exert downward pressure.