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Jefferies upgrades Fevertree to 'buy', shares fizz
(Sharecast News) - Shares in Fevertree Drinks fizzed higher on Tuesday after Jefferies upgraded the stock to 'buy' from 'hold' and hiked the price target to 1,100p from 900p, highlighting a "more refreshing growth story". Jefferies said the deal with Molson Coors will provide a major uplift in scale and execution capability in the US, and de-risks the supply chain.
"Marketing spend is set to double, which will boost brand awareness," the bank said.
"The superior growth and margin profile of Fever's portfolio versus mainstream beer is a strong incentive for TAP and its distributors to push the brand.
"These levers position Fever for accelerating growth, margin recovery and higher cash returns."
Jefferies said that over and above the 8.5% shareholding in Fevertree, it sees Molson Coors fully aligned to grow the company's portfolio.
"The core beer portfolio in the US is under pressure and TAP's Acceleration Plan (Oct'23) is focused on: (a) aggressively premiumising its portfolio; and (b) scaling / expanding beyond beer," it said.
"Fever ticks the boxes on both of these initiatives," it said, adding that success with Fevertree in the US could add more than 200 basis points to Molson Coors' US growth over three years.
At 1305 BST, the shares were up 4.7% at 824.00p.
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