Shares digital

Greggs (GRG) £43.25

High street baker Greggs has fought off input price pressures to boost sales. (Read the full story: www.sharesmagazine.com/node/3574)

Shares says: There is a risk that it won’t be able to keep passing on higher energy and food costs to customers, and maintain current sales rates. Trading has been good so far in 2008, so perhaps it stands a good chance of succeeding, but don’t pop the champagne cork just yet. A Hold

The Independent says: Sausage rolls make up 11% of the bakery group’s sales; surprising, you might think, in these health-conscious times. What might be more surprising is that because of these sales the company is thriving. Despite the good news, some analysts point to a number of possible pitfalls, including higher commodity prices. Another reason to be cautious is that the group’s managing director for the last 24 years, Sir Michael Darrington, is to leave the business. The consensus is that Greggs has a loyal following and a solid balance sheet, which should ensure that 2008 is another good year. A Hold

The City - Altium says: We’re confident that Greggs’ positioning in the market and its cost structure provide it with meaningful advantages against some of its newer competitors. The current change programmes should lead to a more efficient business over a three-year period. Greggs’ long-term prospects appear healthy. It therefore warrants a premium valuation within the sector, especially in light of the strong current trading statement. Since the shares already enjoy a premium of almost one point on an EV/EBITDA basis, and three points on a PE basis, the headroom for further sustained outperformance appears limited. HOLD