Overview
Berenberg has begun covering Greencore Plc with a Buy recommendation and a price target of GBP3.51. The firm notes that Greencore, valued at $2.9 billion and currently trading at a P/E ratio of 21.22, appears undervalued according to available analysis. Berenberg identifies medium-term growth potential underpinned by structural tailwinds and the recent acquisition of Bakkavor.
How the acquisition changes the competitive picture
According to Berenberg, the Bakkavor acquisition expands Greencore's competitive positioning by deepening customer relationships and opening additional avenues for category expansion and new product development. The deal is expected to increase scale in ways that could make it more difficult for competitors to displace Greencore's business, with the enlarged platform providing opportunities to protect and grow share.
Cash generation and capital allocation
The research house anticipates that Greencore will produce significant cash flow. That cash generation is seen as enabling multiple strategic priorities: investing to grow market share, paying down debt, and potentially funding further acquisitions. Berenberg models a 14% EPS CAGR over three years and values the company at an 11x P/E on a fiscal year 2027 basis, with a free cash flow yield of 7.3%.
Valuation and market perspective
Berenberg's forecast contrasts with the company's current P/E of 21.22 at a reported $2.9 billion valuation. The firm frames the projected 7.3% free cash flow yield as consistent with Greencore's three-year average, despite the improved growth outlook tied to the strategic acquisition and structural tailwinds.
Implications for stakeholders
Investors and market participants will be watching how quickly the company converts the acquisition into incremental revenue and cash, and how management prioritizes deployment of free cash flow between growth initiatives, debt reduction, and M&A. Berenberg's initiation positions Greencore as a stock with near-term strategic catalysts and a medium-term earnings trajectory that underpins its Buy rating.