On Friday, Berenberg issued a new rating for Cranswick Plc (CWK:LN), moving the stock from a "Buy" to a "Hold" position. The firm also adjusted the price target to GBP54.00, a decrease from the previous GBP56.74. The decision to downgrade is based on the company's current valuation, which has seen a significant increase since August 2023.
Cranswick's shares have experienced a notable re-rating over the past months, climbing from 15.5 times to 18.5 times. This change in valuation places the stock more than one standard deviation above its three-year historical average. Additionally, Cranswick's shares are trading at a near-record premium compared to industry peers, including Hilton Food Group, which Berenberg continues to rate as "Buy."
Berenberg's analysis suggests that for Cranswick's shares to continue gaining momentum, significant earnings catalysts would be necessary. However, the firm does not anticipate such catalysts to emerge in the near term. As a result, Berenberg considers the shares to be fairly priced at their current level.
Despite the downgrade, Berenberg acknowledges Cranswick's strength as a long-term investment. The firm's view is that while Cranswick remains a solid company, Hilton Food Group currently presents a more attractive opportunity for material capital appreciation within this market cycle.
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