Goldman downgrades Britvic on weaker outlook
Goldman Sachs downgraded drinks maker Britvic to ‘neutral’ from ‘buy’ and slashed the price target to 600p from 810p, removing the stock from its ‘conviction list’ following the full-year results earlier this week.
Beverages
22,007.74
17:09 25/04/24
Britvic
863.50p
16:40 25/04/24
FTSE 250
19,601.98
17:09 25/04/24
FTSE 350
4,434.34
17:09 25/04/24
FTSE All-Share
4,387.94
16:49 25/04/24
It said that while the numbers were better than it had expected, it is concerned about the outlook going into full-year 2017, given rising input cost pressures.
GS noted that since being added to the buy list on 4 December 2014, the shares are down 15.7% versus the FTSE World Europe up 5.5%. Since being added to the ‘conviction list’ on 29 January 2015, the stock is down 21% versus the FTSE World Europe up 3.7%.
Goldman reckons this underperformance was driven by difficult trading conditions in GB, and health concerns around sugar.
The bank cut its FY2017-19 earnings per share estimates by 4%, 8% and 8% to 46.67p, 47.91p and 50.97p, respectively.
“We believe Britvic faces downside risks from input cost inflation in the UK, as well as the UK regulation on soft drinks with added sugar; this was indicated by the FY17 guidance, which implies flat performance versus the 52-week adjusted EBITA reported in FY16, although we still see upside from the US and Brazil businesses.”
At 1120 GMT, Britvic shares were down 1.9% to 532p.