Broker snap: Panmure downgrades Britvic after Fruitshoot recall

11th Jul 2012 10:30

Panmure Gordon has downgraded its recommendation for soft drinks group Britvic from 'hold' to 'sell' and slashed its target price from 350p to 250p after Wednesday's trading update which saw the stock drop by 15 per cent.Britvic has said the recall of its Robinsons Fruit Shoot and Fruit Shoot Hydro drinks could cost the company £15-25m, up from earlier guidance of just £1-5m. Added to this, poor weather conditions and weak consumer sentiment means the group now expects to deliver a full year results at the bottom end of market expectations - before taking account of the impact of the recall."Whilst Britvic cannot control the weather, we believe the issue surrounding the product recall was avoidable," the broker said.After the bottles were recalled last week "as a precautionary measure...due to a packaging safety issue", the company said that it will re-supply an alternative proven sports cap. However, the re-supply will start in six weeks with a gradual increase to meet historic levels of demand within six months."In order to reflect the revised financial impact of the product recall and further weak trading performance we have reduced our profit before tax forecasts by £25m to £80.1m in FY2012E and by £20.5m in FY2013E to £101.5m," Panmure said.BC