Berenberg lowers target price on Fevertree

25th Mar 2022 10:05

(Sharecast News) - Analysts at Berenberg lowered their target price on drinks maker Fevertree from 2,600.0p to 2,250.0p on Friday after the group lowered its full-year underlying earnings guidance.

Berenberg noted that in the lead up to Fevertree's 2022 full-year results, the market had been "increasingly concerned" about its ability to manage cost inflation, with shares down roughly 40% over the course of the year.

The German bank pointed out that in the end, management reduced full-year 2022 EBITDA guidance by approximately 9% at the midpoint, which was enough to bring "some relief to the shares".

However, while earnings were expected to be broadly flat this year, Berenberg said Fevertree's sales momentum remained "very strong" and it believes that margins can recover in time.

"We lower our price target to 2,250p, reflecting a higher risk premium and a more cautious earnings track, but retain our 'buy' rating," said the analysts.