DAVY VIEW

We believe that Associated British Foods (ABF) has reached an inflection point in its equity story, having established a sustainable margin corridor for Primark, which paves the way for growth-based investments. A proactive approach to brand and marketing investments at Primark, coupled with its ongoing store rollout, forms a potent combination to drive future returns. We upgrade our FY24 and FY25 adjusted EPS by 7.5% and 8.4% respectively. We retain our ‘Outperform’ rating and increase our price target to £31.2, implying c.17% upside. We believe the current valuation fails to reflect the material advancements made across the business.