In a note to clients, JPMorgan’s analysts said: “In an increasingly uncertain 2020 Beverages earnings growth environment (e.g. China, India), we believe Britvic offers the attraction of good visibility on mid-single-digit EPS growth (FY20E: +3%, 5% MT CAGR) and improving cash generation (with increasing balance sheet optionality).”
The analysts noted that the FTSE 250-listed stock trades at a relatively attractive valuation, with a 14.8 times calendar 2020 price/earnings and around a 25% sector discount, supported by a 3.5% dividend yield.
They concluded: “With the uncertainty around the UK market and Christmas trading behind us following a good Q1, we believe the market can focus on the increasing quality of the growth and cash flows.”
JPMorgan retained a 1,065p price target on the stock, which was changing hands at 927p each, up 0.2% on Friday’s close.