Middle-class fitness spend looks good for Glanbia, says Morgan Stanley

Cantillon: Analysts advise investors to bulk up portfolios with beaten-down food stock

Glanbia, whose protein shakes have long been a favourite of gym-going New York traders, received a boost from one of the most venerable names on Wall Street on Friday as Morgan Stanley advised investors to start bulking up their portfolios again on the beaten-down stock.

Analysts at the bank, including Graham Hunt, moved their rating from the equivalent of a sell to an outright buy, saying its recent pullback opens up an "attractive entry point".

Glanbia lost as much as a quarter of its market value over six sessions through t Wednesday after the company, led by chief executive Siobhán Talbot, slashed its full-year earnings target due to problems in its main division, Glanbia Performance Nutrition (GNP), maker of the protein shakes and bars.

Geopolitical tension

The company blamed geopolitical tension and supply chain issues that hit sales in the Middle East, weaker economic conditions affecting Latin America, supply chain tweaks in India in response to tariffs there have taken longer than planned, and European consumers moving at pace to buying online. All are temporary issues, according to Talbot.


While Hunt has taken a red pen to his Glanbia earnings estimates (along with every other analyst that covers the company), and believes there are questions over the stability of growth of its core brands, he said a lot of bad news has been priced into the stock.

“At these levels the shares look like a long-term call option on increasing middle-class personal fitness spend globally, one of the few remaining stocks offering this kind of trend on cheap valuations,” he said.

Shares in the company jumped 4.5 per cent on Friday to €11.72, giving Glanbia a market value of €3.47 billion. While Hunt’s €14.50 price target for the stock offers 24 per cent upside, investors may need some evidence Talbot has got things under control.