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Investing.com - RBC Capital downgraded Bakkavor Group Plc. (LON:BAKK) from Outperform to Sector Perform on Friday, while raising its price target to GBP2.30 from GBP2.00.
The food manufacturer’s downgrade comes despite RBC acknowledging that Bakkavor’s strategy "is paying off" with improved margins in the first half of 2025, which increased by 50 basis points to 5.7% despite higher inflation and lower volumes following the Wigan facility closure.
RBC expects Bakkavor’s margins to continue improving to approximately 6.1% by 2026, driven by a leaner organizational structure and additional self-help initiatives across the company’s operations.
The analyst firm noted that Bakkavor’s 2025 cash position is improving, which should reduce leverage to 0.8x compared to the previous estimate of approximately 1.1x, strengthening the company’s financial position.
A key catalyst for Bakkavor remains the Competition and Markets Authority (CMA) review, which is expected by October 27, while the company currently trades at 12x 2026 estimated EV/adjusted EBIT, which RBC indicates is in line with industry peers.
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