Greencore Group's (LSE:GNC) positive interim financial results have earned the food manufacturing firm a 'Buy' rating from analysts at Deutsche Bank.
The bullish DB call comes with a 325p target, versus Greencore's market price of around 211p.
Analyst Damian McNeela noted that the pro‑forma adjusted operating profit (excluding the US) was up 15.3%, to £73.3m, lifting adjusted operating margin about 60 basis points to 5.6%, and he attributes the outperformance to stronger conversion of sales, disciplined cost control and efficiency gains reaped from its 'operational excellence' programme.
DB also highlighted UK revenue climbing 3.2% to £1,318m, supported by discipline and cost recovery/pricing, with gross profit margin marked at 32.3%. Specifically, the analyst noted that Greencore's £73.3m operating profit landed comfortably ahead of the bank's £67.5m forecast.
McNeela says integration of recently acquired Bakkavor and the delivery of targeted synergies are seen to be progressing to plan.
Investors can next look to Greencore's Q3 trading statement in July, to see whether margin improvement converts directly to cash and a sustained outperformance.
