The bank upgraded the stock to ‘Buy’ as it expects “significant growth”

Greggs (GRG) shares rose over 3% after the stock was upgraded by analysts at UBS who believe in “significant” growth opportunity for the baker.

UBS upgraded Greggs’ shares to ‘Buy’ from ‘Neutral’, lifting the price target to 2,300 pence per share from 1,880p.

Greggs shares reached a high of 2,064p following the news, after closing at 1,966p on Tuesday.

The company’s stock rebuffed the FTSE 250 index which was trading down 1% on Wednesday around midday due to escalating Brexit uncertainty on the news that the Government is seeking to suspend Parliament just weeks ahead of the 31 October deadline.

“We believe that the growth opportunity remains significant for Greggs, and given the strength of trading six months on from the vegan sausage roll launch, have greater confident in the outlook,” UBS analysts Heidi Richardson, Jarrod Castle and Louise Wiseur said.

The bank had downgraded Greggs to ‘Neutral’ in February as it believed the strength of its like-for-like sales in January was mainly due to the hype around the launch of its vegan sausage roll.

However, the analysts added they “have since seen LFL growth remain strong” despite the initial publicity around the vegan sausage roll subsiding.

The concluded: “As such, we now re-evaluate the risk reward for Greggs, with a focus on the potential growth opportunity in terms of LFL and new store roll-out remaining, whilst acknowledging that expectations have been elevated by recent performance.

“We believe that Greggs is still at the beginning of realising the benefits of the transformation program, which has reinvented the brand, product offering and store format, with the vegan sausage roll launch acting as a catalyst for consumers to reappraise the brand, providing a platform from which to grow off.”