Greggs Shares Gain: Price Target Cut, Yet Substantial Upside Remains

Greggs shares (LON:GRG) are under scrutiny as Berenberg Bank lowered its price target, yet the firm continues to advocate a “Buy” rating reflecting ongoing confidence in the bakery chain's potential. The revised target suggests a significant upside despite current market headwinds, with Greggs share price 0.68% higher through the early part of trading.

The revision by Berenberg sets a new price target of 2,170p, down from 2,640p. Despite the cut, this target still represents a potential increase of approximately 33% from the current share price of 1,627p. This projection underscores Berenberg's belief in Greggs' inherent value and future growth trajectory, even amidst prevailing economic uncertainties.

Looking across Wall Street, and analyst sentiment on Greggs remains mixed. JPMorgan initiated coverage with an “Overweight” rating and a price target of 2,110p. Jefferies, while maintaining a “Buy” rating, also reduced their price target from 2,650p to 2,500p. However, Deutsche Bank presents a contrasting view, lowering its target to 1,330p and upholding a “Sell” rating, citing concerns over slowing sales and rising costs. Redburn-Atlantic also tempered its outlook, downgrading Greggs from “Buy” to “Neutral” with a reduced price target of 1,651p, pointing to near-term anxieties about margin pressures.

Greggs' share price has faced downward pressure over the past year, falling 21.42% as decelerating sales growth, increased operational expenses, and broader market challenges weighed on sentiment.

Adding to the complexity, activist investor Lauro Asset Management has recently urged Greggs to implement significant cost-cutting measures. Their concern is that without such measures, Greggs could become a target for a low-cost takeover. This external pressure highlights the need for Greggs' management to address operational efficiency and enhance shareholder value.