Shares in Premier, best known for Branston pickle, Mr Kipling cakes and Hovis bread, are up 0.85p to 13.9p.
Investec analyst Martin Deboo has cut his price target from 20p to 15p. He was quoted in The Guardian as saying: “We think Premier is unlikely to go bust and may be able to avoid an equity raise. But we also think the shares are effectively un-investable in the current climate and impose a 25% provision on our target price.”
He also speculated on how Premier could unlock value from its struggling own-label business Brookes Avana, which is forecast to lose £23m in 2011: “Our consistent view has been that Premier would be well advised to exit Brookes Avana if the right buyer can be found. But the business has been left standing in the recent game of UK own-label musical chairs that has seen Two Sisters acquire Northern Foods and Greencore make an offer for Uniq.
“If Premier are obliged to keep the business, then the question is one of whether to close [the under-invested pie and pizza plant in] Leicester. The complication is that Premier will then have to fund material exit costs within tight cash constraints. Difficult, in our view.”
Source: Guardian
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