Greggs takes big slice of action as ex-dividends weigh on FTSE
INVESTORS tucked into bakery chain Greggs after broker Berenberg upgraded the pie-seller, citing its potential for regional expansion and opportunity to develop its product mix.
The success of shifting the focus of new stores to non-shopping locations and Greggs’ sparse coverage of the South West and Northern Ireland give the bakers the opportunity to significantly up its presence in the medium term, the broker told clients.
Upgrading to “buy” from “hold”, Berenberg argued that the Newcastle-based firm can overcome the challenging consumer environment and marginsqueezing cost pressures.
The company “still has a number of levers it can pull” to drive growth, it said, with recent sales boosted by its new breakfast and healthy “Balanced Choice” lines.
Following the upgrade, Greggs jumped to the top of the FTSE 250 leaderboard, climbing 57p to £11.74, its highest share price in almost a year and a half.
Elsewhere, a host of blue-chip heavyweights, including Lloyds, Anglo American, Diageo, Rio Tinto and BP, going ex-dividend dragged the FTSE 100 firmly into the red with tensions on the Korean peninsular continuing to weigh on European equities.
Investor angst over the spat between North Korea and the US seemed to have waned, but US equities slipping into the red for a third consecutive session intensified losses in Europe.
With only a handful of stocks eking into positive territory, the UK’S benchmark index closed 102.12 points lower at 7389.94, a 1.4pc slump.
Housebuilding stocks stumbled after the Royal Institution of Chartered Surveyors’ latest survey of the sector pointed to a stuttering housing market with London and the South East pulling down overall house price figures.
With investors spooked by RICS’ warning that the latest data was just a sign of things to come, Taylor
Wimpey shed 5.8p to 189.1p while Barratt Developments and Persimmon dived 17.5p to 589.5p, and 74p to £24.62, respectively. Coca-cola HBC, a London-listed bottling company shared between the soda conglomerate and the Leventis-david Group, fizzed most on the FTSE 100 as shares popped 219p to £25.92, a 9.2pc rise.
Buoyed by warmer June weather and emerging markets growth, its earnings outstripped expectations, helping the bottler reach its highest-ever share price.
On the mid-cap 250 index, building materials maker Ibstock slid 15.4p to 232.5p as growth softened in its US business, while Ultra Electronics climbed 81p to £19.76 after its chief executive and two nonexecutive directors upped their stakes in the defence and technology group.