Source: Sharecast
Berenberg thinks that Greencore is well placed to continue to deliver "strong medium-term growth", with structural growth tailwinds underpinning this. It also pointed out that Greencore's recently completed acquisition of Bakkavor "has the potential to transform the business".
"The acquisition expands Greencore's competitive moat, deepening relationships with customers, increasing the opportunity for category expansion and new product development, and thereby helping to lock out competition due to its increased scale – allowing it to become a category leader in the food-to-go and freshly-produced food market," said Berenberg.
The German bank also expects to see "significant cash generation", enabling Greencore to invest to grow its market share, deleverage and offering scope for further mergers and acquisitions.
"We forecast a 14% three-year EPS CAGR, with upside potential, and see Greencore trading on a FY27E P/E of 11x (a 7.3% FCF yield) – in line with its three-year average despite the improved growth prospects," said Berenberg.
Reporting by Iain Gilbert at Sharecast.com