Panmure upgrades AB Foods on Primark expansion into US

23rd Apr 2014 10:00

Panmure Gordon has upgraded its rating for Associated British Foods from 'hold' to 'buy' after the company announced its intention to expand its fast-growing Primark brand into the US.The broker hiked its target price for AB Foods shares from 2,760p to 3,210p, highlighting that the company's interim results also came in ahead of forecasts."The stand-out news however is the announcement that Primark will enter north east US towards the end of next year," said analysts Graham Jones and Damian McNeela."This is sooner than we had anticipated, and whilst Primark will continue its measured approach to expansion, in our view this significantly increases the growth potential of Primark."AB Foods, which already has Primark stores in nine countries in Western Europe, has signed a lease for 70,000 square feet of selling space in Boston and will open up shop towards the end of 2015. Further stores are planned across the wider region through to the middle of 2016.The company on Wednesday also reported 10.4% growth in first-half earnings per share to 45.8p, 2.9% ahead of Panmure's 44.5p forecast.The stock was 7.9% higher at 2,936p by 09:59.BC