Associated British Foods shares were upgraded to Buy at Liberum on significant earnings growth and the worst of cost inflation pressures passing.

The group’s shares were upgraded to Buy from Hold on Wednesday, which saw its shares close over 1% higher. Liberum analyst Anubhav Malhotra also raised the firm’s price target to 2,400p from 1,900p.

Malhotra sees “significant earnings growth for ABF, as cost pressures begin to ease and the worst has passed. UK inflation remained at 8.7% for the month of May, as consumers spending power continues to be affected.

However, this is below the peak of 11.1% at the end of 2022, suggesting potential confidence for consumers. ABF’s Q3 results on Monday showcased strong growth, with group revenue up 16% and a strong performance from Primark, with sales up 13%.

By James Fyeman