Losses in mining shares did not weigh heavy on the FTSE100, which is up marginally by 0.1% this morning, thanks to a rise in share prices of Associated British Foods, the owner of Primark.
ABF shares rise thanks to favourable RBC note
Associated British Foods recorded the greatest growth rate on Tuesday. The stocks gained 2.37% in morning trading. This can be attributed to a confident RBC note on the company.
The Royal Bank of Canada has upgraded its recommendations for ABF from “sector perform” to “outperform”. It also increased the target price by more than one fifth, from £28 to £34.
In its statement on Primark, BRC stated:
“We think Primark is relatively well positioned as it is the cheapest retailer in the price-conscious UK apparel sector. It has also improved on customer perception for product and style according to our latest customer survey. In addition, it has relatively high non-UK exposure (around 50% of Primark and around 57% of group sales) meaning it is relatively shielded from cost and currency pressures in the UK. We expect like for like sales to remain muted owing to a tough consumer backdrop and the lack of an ecommerce offer, however we have raised them slightly versus easy comparisons.”
Other businesses run by ABF should also perform better in the future
RBC commented on AB Sugar:
“For Sugar a reduction in EU stock levels and a recent increase in world sugar prices have resulted in a strengthening in European sugar prices. This should help AB Sugar’s profit trajectory from next year. We also think an exit from China would be well received by the market and would further strengthen ABF’s already under- leveraged balance sheet.”
Other FTSE100 companies are also up more than 2% today
Industrial equipment rental company Ashtead Group is up 2.07%.
CRH plc, mother company to an international group of buildings material firms, rose 2.14%.
The banking and financial company HSBC Holdings gained 2.07%, at midday.
Katharina Fleiner 30/08/2016
