Greggs (LSE: GRG) shares have endured a pronounced boom-and-bust cycle over the past decade, with the price still sitting well below its autumn 2024 highs.
After profits declined disappointingly in 2025, analyst forecasts now point to slow but steady growth resuming over the next few years.
The dividend is expected to be held this year, offering shareholders a 4.1% yield based on the 1,644p closing share price recorded on Tuesday, 2 June.
Beyond this year, analysts broadly expect the dividend to return to a modest upward trajectory, providing some comfort to long-term income investors.
Four of the most recent broker recommendations, all published in May, came from UBS, Jefferies, Deutsche Bank, and Berenberg within just a four-day window.
Three of those four notes were published following Greggs’ trading update covering the first 19 weeks of the year, which was released on 12 May.
The range between the highest and lowest price targets is striking, with the most bullish target sitting a full 65% above the most cautious, and 34% ahead of where shares last closed.
The most pessimistic of the four broker targets implies a 19% decline from current levels, underlining just how divided professional opinion has become on the stock.
Part of the uncertainty stems from Greggs’ commodity and energy hedging strategy, which the company outlined directly in its May trading update.
The company stated: “Our forward buying of key commodities continues to provide protection against increased inflation in the near term; we have forward purchase agreements in place representing circa five months of cover for our food and packaging needs and 85% of our 2026 energy and fuel requirements are fixed in price.”
The update also noted that “circa 50% of our 2027 energy and fuel requirements are fixed,” demonstrating a degree of forward planning that has helped hold back product price rises so far.
While fixed energy pricing provides some near-term insulation, food and commodity costs present a less predictable challenge, with little expectation that those prices will retreat meaningfully.
The hedging strategy can delay the impact of inflationary pressures, but it cannot eliminate them permanently, and higher end prices may eventually prove unavoidable.
That lingering uncertainty around cost pass-through could plausibly explain, at least in part, why broker targets are spanning such an unusually wide range at this moment.
With a forecast price-to-earnings ratio of 13.5, the current valuation does not obviously support the kind of multiple expansion that would drive a fresh bull run in the near term.
Investors weighing up a position in Greggs may be better served by monitoring how food inflation feeds through into margins as the year progresses before committing capital.
Greggs does retain appeal as a long-term dividend stock given its established brand and resilient consumer demand, but the near-term picture warrants patience rather than urgency.
