Sparkling results from fizzy mixer drinks maker Fevertree Drinks PLC (LON:FEVR) provided only a mild tonic to the share price.
The fast-growing company, riding the wave of the resurgence in popularity of gin, reported 69% year-on-year growth in revenue to £40.6mln in the first half of 2016 from £24.1mln in the same period of 2015.
Adjusted underlying earnings, or EBITDA, jumped 72% to £12.4mln from £7.2mln the year before, while the interim dividend was practically doubled to 1.54p from 0.78p, impressing the market – but not that much.
The shares, up by more than a third year-to-date, rose 0.6% to 812p, indicating the market has become used to the sort of growth Fevertree reported.
Broker Shore Capital Markets managed to summon some enthusiasm, however, saying that the results look stronger than it expected, even after the May trading update had flagged up strong trading that prompted upgrades to market expectations.
“We note our FY [full year] sales growth forecast is 34% so whilst there has been some beneficial FX [foreign exchange] moves momentum appears very strong. We highlight the comparatives toughen in H2 [second half] and some of the distribution gains in 2015 annualise but nonetheless the results are highly impressive,” Shore’s Phil Carroll said.
Carroll said the frothy share price “arguably required upgrades” to sustain it and although these appear to have been delivered, the question is whether the shares can deliver further upgrades as the comparative figures – known as “comps” in broker-speak - get tougher.
“The comps get tougher but momentum appears very strong so it cannot be ruled out. In the meantime, we retain our HOLD recommendation,” Carroll said.