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Fevertree downgraded to ‘underweight’ by JP Morgan over lingering pandemic pressures

Analysts said the more profitable on-trade demand, which includes restaurants and bars, is at risk

Fevertree Drinks - Fevertree downgraded to ‘underweight’ by JP Morgan over lingering pandemic pressures

Fevertree Drinks PLC (LON:FEVR) was downgraded to ‘underweight’ from ‘neutral’ by JP Morgan due to lingering COVID-19 pressures to top-line and margins.

Analysts said the more profitable on-trade demand, which includes restaurants and bars, faces risks such as re-closures in parts of the US.

READ: Fever-Tree says sales growth still bubbly as it acquires German distributor

The stock, which has rocketed 150% from mid-March lows outperforming the sector up only 28%, “appears to price in a seamless recovery in financial year 2021, including continued share/distribution gains in the US and Europe over the mid-term”.

The mixers producer's target price was bumped up to 1,900p from 1,260p reflecting the outperformance.

The six months to June 30 are expected to see a 24% decline in organic sales to £90mln, with underlying earnings (EBITDA) down 34% to £24mln.

However, these are forecast to improve gradually, with like-for-like sales dropping 9% to £241mln and EBITDA down 22% to £59mln in the year to December.

Shares dropped 4% to 2,271p on Thursday late morning.

Quick facts: Fevertree Drinks

Price: 2268 GBX

AIM:FEVR
Market: AIM
Market Cap: £2.64 billion
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