AB Foods Shares Slide as Goldman Sachs Issues ‘Sell’ Rating

Associated British Foods (LON: ABF) experienced a dip in its share price this morning after Goldman Sachs downgraded the stock, citing concerns about Primark's sales growth and the company's profit margins. The downgrade adds to a series of negative assessments from analysts, placing further pressure on the equity.

The market responded to Goldman Sachs' revised outlook with ABF shares falling 0.56% to 1,848.50p. This decline reflects growing apprehension regarding the future performance of the company, particularly its flagship retail chain, Primark. Goldman Sachs' new price target of 1,750 GBp, down from 2,300 GBp, signals a significant shift in expectations for ABF's valuation.

Goldman Sachs' pessimistic view centers on a perceived slowdown in Primark's sales growth. This concern aligns with earlier warnings from other financial institutions. Jefferies, for example, downgraded ABF in December, setting a price target of 1,800 GBp, expressing doubts about Primark’s ability to maintain consumer relevance amid intense competition. Jefferies projected a 2.0% decline in Primark's like-for-like sales for the fiscal year 2025/26, noting an expected -3.5% performance in the UK.

Adding to the negative sentiment, Morgan Stanley downgraded ABF to ‘Underweight' in January 2025, pointing to macroeconomic headwinds affecting disposable income, particularly among lower-income households, a key demographic for Primark. RBC Capital Markets had also previously downgraded ABF, citing a shift in Primark's price perception, potentially eroding its value-for-money appeal.

These downgrades followed a profit warning issued by ABF in September 2025, when the company announced expectations of a 2% decrease in Primark's like-for-like sales for the second half of the financial year. The company attributed this decline to a subdued consumer environment in Europe and weaker trading conditions, contributing to a significant 10% drop in ABF’s share price at the time.

While Deutsche Bank upgraded ABF to ‘Hold' following this share price fall, they also lowered the price target to 2,000 GBp, suggesting that while the downside risks are priced in, significant upside is not anticipated. The series of downgrades collectively highlights concerns about Primark's performance and ABF's broader financial health.

Price Targets

As Primark faces challenges in maintaining sales growth and profitability, the shares may remain under pressure. The combination of macroeconomic factors and company-specific issues has created a challenging environment for ABF, leaving markets cautious about its near-term prospects, and potentially impacting future support for the share price.