Kepler Cheuvreux Downgrades Associated British Foods to Hold on Delayed Split, Primark Weakness

Kepler Cheuvreux downgraded Associated British Foods (LON: ABF) to “Hold” from “Buy” on Wednesday, September 16, 2026, cutting its price target to 1,900 pence from 2,100 pence.

The move follows the conglomerate’s decision to push back the planned separation of its retail and food businesses to December 2027, removing a catalyst the broker had expected to underpin the shares.

The downgrade comes days after ABF’s trading update, in which the group said Primark’s like-for-like sales were expected to fall 3% in the fourth quarter to September 12, with UK and Ireland sales up 0.4% but continental Europe down 4.3%. Shares fell more than 9% on the day of that update.

Total Primark sales are still expected to rise around 2% for the full year, helped by new stores and franchising, though Kepler noted the retailer is struggling to restart like-for-like growth amid weak consumer sentiment across its main markets.

Kepler also flagged deepening losses at ABF’s sugar division, forecasting an adjusted operating loss of £70 million to £170 million in fiscal 2027 — wider than previously expected — following losses of up to £60 million in fiscal 2026, driven by low European sugar prices and higher gas costs.

The broker trimmed its sales estimates by 1.1% for 2026 and 2.5% for 2027, cutting adjusted EBIT forecasts by 2.5% and 13.5% respectively, and adjusted EPS by 2.0% and 15.7%. Kepler now expects fiscal 2027 to be a “transition year” for the group, which carries a market capitalisation of roughly £13 billion.

ABF shares were little changed following the downgrade, trading around 1,839p, near their previous close of 1,841p.