Greggs (LSE: GRG) shares are on the move again, comfortably outperforming the FTSE 250 index of mid-cap growth stocks over recent months.
The baker’s shares have rocketed 25.7% over six months, a performance roughly five times greater than the gains posted by the FTSE 250 over the same period.
That momentum has been fuelled in part by a robust first-half trading update released in July, which gave investors renewed confidence in the business.
Despite the encouraging run, City analysts remain sharply divided on where the stock will trade over the next 12 months, with forecasts spanning a wide range of outcomes.
Among 16 analysts currently covering Greggs, the most bullish sees the stock climbing from £18.61 to £22.10, representing a gain of 18.8% from current levels.
At the other extreme, the most bearish forecast puts the shares at £13.30, a decline of 28.5% from today’s price, highlighting the degree of uncertainty in the market.
The average price target across all 16 analysts sits at £17.90, implying a modest 3.8% decline from current levels over the next year.
On the trading front, Greggs reported like-for-like sales growth of 2.1% in the first half, even as hotter-than-usual weather dampened demand for hot goods across the range.
The company itself noted that “Greggs continues to grow market share and overall volumes, supported by estate growth and developing channels (e.g. grocery retail).”
New product launches contributed to sales growth, while strict cost controls helped push operating profit up by an impressive 22.9% during the period.
Rising inflation remains a risk, placing fresh strain on consumer spending and raising questions about whether Greggs can sustain its recent momentum into the second half.
The baker currently operates 2,773 stores and has set a longer-term target of expanding that estate to approximately 3,500 locations to drive further growth.
Future store openings are expected to focus on higher-margin travel locations, while new production and distribution facilities are designed to support that expanded footprint.
Channels including grocery retail, delivery, and evening trading are seen as significant growth opportunities that still have considerable runway ahead of them.
Greggs currently trades on a forward price-to-earnings ratio of 14.9 times, well below its 10-year average of 22 to 23 times, which some investors may view as an attractive entry point.
