Greggs shares have recovered over 35% over the last three months, as the retail market continues its recovery and looks set to bounce back.

As a result, Deutsche Bank upgraded Greggs to a Buy from Hold, with analyst Harishankar Ramamoorthy increasing its price target to 2,950p from 1,950p.

Ramamoorthy stated that 2022 saw the UK pubs & restaurant sector bear the brunt of the cost-of-living crisis and it was a challenging period for many retailers. Greggs declined almost 50% last year as consumers battled with soaring inflation and looked to cut spending where they could.

Ramamoorthy said share prices have started staging a recovery and looks at the 2023 outlook as a “glass (second) half full.”

However, the outlook currently remains uncertain. Recession fears remain a big worry amongst investors as Central Banks continue to raise rates to battle inflation. Despite this, UK retailers reported resilient earnings over the Christmas period as spending showed little signs of easing.

Greggs reported in early January its Q4 trading update, with FY22 total sales up 23% and LFL sales up 17.8%. Therefore, after a solid trading update, the group said they anticipate a full year outcome in line with their previous guidance.