Greggs (LSE: GRG) shares have staged a notable recovery after falling almost 40% during 2025, with the rebound beginning in July of that year.
The initial decline was driven by a painful combination of sluggish consumer spending, unusually wet and then hot weather, and sharply rising employment costs hitting the business simultaneously.
Growth slumped, profits dropped, and investors began questioning whether Greggs’ long-running expansion strategy had finally reached its natural limits.
Evidence at the time suggested those concerns had genuine merit, making the subsequent turnaround all the more striking for shareholders who held their nerve.
Half-year results for 2026 have gone a long way toward calming those fears, with pre-tax profits climbing 20% to £76m across the period.
Earnings per share over the same half-year period beat analyst expectations by around 10%, adding further weight to the case that the worst may be behind the bakery chain.
Third-quarter trading data reinforced the recovery narrative, with total sales growth accelerating to 7.7% on the back of continued product innovation throughout the period.
Even on a like-for-like basis, sales moved 3.4% higher, and management has since upgraded its full-year guidance in response to the improving trading environment.
These growth rates remain well below what Greggs historically delivered during its peak expansion years, but they represent meaningful progress toward returning to double-digit territory.
Despite the improving momentum, institutional analysts remain divided on where the stock goes from here over the next 12 months.
Jefferies continues to rate Greggs as a Hold, carrying a price target of 1,740p, which sits roughly 12.5% below current trading levels.
UBS takes a considerably more optimistic view, placing its price target at 2,200p, representing upside of approximately 10.5% from where the shares currently trade.
The gap between those two targets illustrates just how much uncertainty still surrounds both the Greggs recovery story and the broader UK consumer environment.
Management has flagged stronger inflationary pressures ahead, alongside the added ramp-up costs associated with bringing new distribution centres to full operational capacity.
The company is also proposing to consolidate some of its manufacturing operations, with a potential closure of four sites expected to unlock £20m in annualised savings.
That restructuring move is anticipated to cost £60m to execute, placing additional strain on near-term profitability even as trading trends move in the right direction.
Improving sales figures, disciplined expansion, and continued menu innovation suggest Greggs’ recovery is beginning to build genuine momentum heading into the remainder of 2026.
