AG Barr PLC shares were among the top risers on the FTSE 250 on Tuesday morning after the Irn Bru maker announced trading in line with expectations, along with two acquisitions in the fast-growing 'adult soft drinks' category.
The Cumbernauld-based group reported revenues up 4% for the year to 31 January, and adjusted operating margin expanding from 13.6% to 14.7%.
Frobishers, a premium juice brand, was bought for £13 million near the end of the financial year, with the £38 million purchase of upmarket ginger beer maker Fentimans completed in the first few days of the new year.
Analysts at broker Panmure Liberum said the group delivered "strong financial progress", notably the 110 basis points of margin expansion and double-digit adjusted profit growth.
Revenue growth of circa 2.5% on a 52-week comparable basis was "slightly lower than hoped", they added, but the outlook and innovation pipeline "tells a different story".
New product development and brand refreshes landed in January, with more to come this year, which the analysts said "should drive an acceleration to the 4-5% target growth rate".
The two acquisitions "broaden the product portfolio and offer meaningful cost and revenue synergy opportunities over time".
With the shares having gone sideways in the past year, "reigniting the top-line will be a key driver of equity", the analysts said, viewing the shares as "cheap on the potential of future growth off a rock-solid balance sheet".
Broker Peel Hunt said it believes the acquisitions "enhance the group’s product proposition and demonstrate the team’s intent to put capital into growth", leading to an increase in its target price from 750p to 770p.
The shares rose 5.2% to 684p in early trading, having earlier hit a three-month high above 700p.