Analysts at Berenberg lowered their target price on food manufacturer Bakkavor from 145.0p to 125.0p on Monday, stating pressures still lingered despite visible improvements.
Berenberg, which stood by its ‘hold’ rating on the stock, said Bakkavor’s recent full-year results showed improved margins, accelerating international sales growth and an improved net debt position.
However, while the analysts said signs of improvement were “clear”, they added that their optimism was “tempered”.
“Cost inflation of 10-12% is forecast for FY22, which will weigh on margins and likely blur signs of operational outperformance,” said Berenberg.
The German bank also highlighted that while it does believe downside protection to be present given the company’s “undemanding valuation”, it also thinks risks are balanced for now, until the “current challenging operating environment” improves.
