Greggs share price forecast: What’s next for the UK's bakery?
The price of Greggs stock has been declining since the company published its latest trading update covering the fourth quarter and entire 2021 fiscal year as a surge in the number of virus cases in the United Kingdom combined with rising costs weighed on market sentiment toward the stock.
In an interview with Reuters in January, the company’s departing CEO, Roger Whiteside, stated that the new variant of Covid-19 was putting pressure on the company’s workforce, although he called the situation “manageable”.
Whiteside acknowledged that results in the fourth quarter of 2021 had been also affected by ongoing supply chain disruptions.
Like-for-like sales during this period grew 0.8% on a year-on-year basis as “challenging conditions” related to the virus situation last November and December weighed on the company’s top-line performance.
Since the year started, Greggs share value has dropped 21%. Most of those losses came after the last trading update was released.
What could be expected from GRG stock in the following weeks, months and years? In this article, we will analyse the latest Greggs share price news along with its price action and fundamentals to outline plausible scenarios for the future.
Greggs stock analysis: Technical view
So far in February, the GRG share price is down 0.01%. The 2,500p level acted as support once again.
Greggs broke below the 200-day simple moving average in mid-January following the release of the company’s trading update. Shares have not managed to reclaim any of that lost territory.
Momentum indicators remain depressed (as of 17 February), with the relative strength index (RSI) standing at 43 (bearish) and the moving average convergence divergence (MACD) staying deep in negative territory.
The chart above shows that a descending triangle has formed as a result of the latest price action. Even though this is not an aggressively bearish formation, investors may consider 2,500p an important support level to watch.
According to the company’s financial calendar, Greggs will be reporting its preliminary results for the 2021 fiscal year on 8 March. This event could catalyse a price move.
Greggs share price news: What could drive GRG further?
Back in January, Greggs announced that Whiteside will be leaving his role on 5 January 2023. In May this year, after the company’s Annual General Meeting, Roisin Currie will be appointed as the company’s new CEO. Since 1 February, Currie has been acting as the Designated CEO, working alongside Whiteside to ensure a smooth leadership transition.
The appointment of a new CEO and the management’s comments concerning the impact of Covid-19 and the supply chain crisis on the company’s financial performance may have driven the latest downtick in the share price.
The following are some other variables that could shape Greggs future share price:
Supply chain situation: The global supply chain has been disrupted by the Covid-19 pandemic, causing delays in shipping times. Depending on how the situation evolves, the company’s top-line performance could be affected.
Rising costs: Inflation in the UK has accelerated due to expansionary measures adopted by central banks and supply chain bottlenecks. Rising costs could depress the company’s bottom-line profitability.
Labour market dynamics: The Covid-19 pandemic has affected the labour market as many workers have leaned towards remote work opportunities. Labour shortages could also affect the company’s top-line performance.
Greggs fundamental analysis: Latest earnings
Greggs published a trading update covering the entire 2021 fiscal year on 6 January.
During the 52 weeks ended 1 January, the company produced total sales of £1.2bn ($1.6bn, €1.4bn), resulting in a 52% jump on the previous year and 4.2% higher than for 2019.
Greggs also reported that it had opened 131 new stores, including 50 franchises, resulting in a total of 2,181 shops in operation.
Greggs ended the year with total cash and equivalents of £198m. It expects to distribute around £30 to £40m more to shareholders this year in dividends.
The management stated that it expects to report full-year sales ahead of its initial expectations for 2022.
Commenting on the latest company updates and a potential Greggs share price forecast, Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said:
Greggs shares: buy, sell, or hold? Analyst sentiment
According to data compiled by MarketBeat (as of 17 February), the consensus recommendation for Greggs stock was ‘hold’, based on three analysts’ ratings. Two of the three analysts rated the stock a ‘buy’ and one a ‘sell’.
The average Greggs share price target stood at 3,470p a share – 30% higher than the last closing price of 2,657p – with the highest estimate at 3,600p and the lowest at 3,340p.
Commenting on the Greggs stock forecast, David Jones, Chief Market Strategist at Capital.com, said:
Greggs (GRG) share price forecast: Targets for 2022, 2025 and 2027
Algorithm-based forecasting service Wallet Investor held a bullish outlook for Greggs stock, based on multiple technical readings. It expected GRG to end 2022 at 2,943.69p.
Its Greggs share price prediction indicated that the price could surge to 3,329.87p by the end of 2023 and 4,113.13p by the end of 2025. Although the service did not provide price targets for 2030, its five-year Greggs stock forecast suggested the stock could hit 4,523.71p in February 2027.
These forecasts have been drafted by analysing the historical Greggs stock market price. They should not be considered a recommendation to buy or sell the stock. Many variables could weigh on the company’s short-term and long-term performance and actual results could deviate significantly from these predictions.
It is important to do your own research. Your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
FAQs
Is Greggs a good share to buy?
Greggs is a well-established business with a strong presence in the United Kingdom. Sales have been growing lately, compared to pre-pandemic levels. However, GRG stock is in a downtrend at the time of writing (17 February).
Whether GRG stock is a suitable investment for you depends on your opinion of the company and your personal investment objectives. Never invest money you cannot afford to lose. And remember that part performance is no guarantee of future success.
Why has the Greggs stock price been going down?
Greggs stock has been declining since the company published its latest trading update. The management noted supply chain issues, the ongoing Covid-19 pandemic and the labour market situation. Moreover, the upcoming departure of the company’s long-dated CEO may have also weighed negatively on the company’s stock.
Will Greggs shares go up or down?
No-one knows for sure. Analysts’ predictions can be wrong. However, their consensus view as of 17 February was that the stock price could rise to 3,470 over the coming year, as data from MarketBeat showed.
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