Broker snap: Brokers divided over Britvic

25th Jan 2012 11:23

Britvic's first quarter trading statement seems to have pleased investors today with shares trading around 2% higher in mid-morning trade; but two brokers seem divided with Nomura staying a buyer and Collins Stewart maintaining its sell rating.The soft drinks maker and bottler said carbonated drinks put some fizz into its Christmas trading, led by a strong gain in take-home market share for Pepsi-Cola (which it produces under licence from American giant, PepsiCo). Revenue for the final three months of 2011 rose 2.5% from a year earlier, driven by growth in Great Britain (GB), France and its International markets, but the results were soured by Ireland's performance; the value of sales in Ireland declined by 10.0% on a 0.2% decline in sales volumes. Nomura says that GB revenues were slightly weaker than expected, while France was ahead and Ireland was broadly in line. International was pulled back by shipment timing."We continue to assume that in the medium term the company will be able to deliver 5% revenue growth in GB and France, although we model slower GB momentum in FY12 due to the uncertain macro outlook," the broker said. Nomura stays positive, saying that the stock's valuation - trading at 9.2 times 2012E earnings - is not demanding and the dividend yield of 5.6% looks attractive. A 425p target price is given.Collins Stewart, however, reiterated its negative view on Britvic, saying that first quarter revenues were higher against "easy comparatives" and these will become tougher in the following three months (GB revenues up 6.8% in the second quarter last year).Also, "In an environment of tax rises (in particular Britvic France and potentially Ireland), challenging top-line growth, we remain concerned that cash flows will remain under pressure," the broker said. Collins Stewart's target price is set at 290p.BC