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RBC Capital Markets raises target price on Fevertree Drinks
(Sharecast News) - Analysts at RBC Capital Markets raised their target price on mixers business Fevertree Drinks from 900p to 1,030p on Tuesday as the group's US partnership with Molson Coors continued to build. RBC Capital said it sees Fevertree's stronger FY27 story building through 2026, with the Molson Coors partnership set to provide "guaranteed profitshares" to 2030 and onshore production from 2027 unlocking structural cost benefits.
The Canadian bank did note that near-term US profitability "remains compressed| by elevated marketing investment to support stronger US brand positioning. However, it also said UK stabilisation, rest of world strength, and Fevertree's debtfree, cash-generative model all serve to provide diversification and support for its more medium-term thesis.
"We rebased our valuation to 2026E which results in a £10.30 PT (9% WACC; 2.5% TG) from £9.00. This reflects a 2026E EV/adj.EBITDA multiple of 21.3x, below FEVR's 10yr avg of ~28.3x but just ahead of its 4yr avg of ~20.3x," said RBC Capital, which has a 'sector perform' rating on the stock.
"Since the MC partnership announcement, FEVR's multiple has recovered while peers traded flat-to-down, reflecting market recognition of the transformational opportunity in the MC Partnership announcement despite broader consumer headwinds."
Reporting by Iain Gilbert at Sharecast.com
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