Coca-Cola HBC fizzes higher as UBS highlights 'best-in-class growth'

27th Nov 2018 12:02

(Sharecast News) - Coca-Cola HBC was the standout gainer on the FTSE 100 on Tuesday as UBS double-upgraded the stock to 'buy' from 'sell' and hiked the price target to 2,650p from 2,050p saying best-in-class growth and balance sheet optionality are no longer priced in.UBS said that having fallen 19% since July the shares now present an attractive entry point for one of the best growth stories in the staples sector. It highlighted organic sales growth at the top end of the sector, scope for ongoing EBIT margin expansion beyond its 2020 target of 11% and balance sheet optionality given its low leverage (net debt /EBITDA 0.8x).In addition, the bank said that in the absence of any M&A, a special dividend is "most likely"."We believe Staples' investors are becoming increasingly sceptical about the concept of 'organic sales growth' given the material contribution from inflationary pricing in emerging markets," said UBS."CCH screens well in this regard with average volume growth of around 2% 2016-18e, the second highest in European Beverages after Heineken."The bank expects a strong end to the year, with fourth-quarter organic sales growth of 5.5%, at the top end of Consumer Staples and above the company's latest published consensus.At 1200 GMT, the shares were up 6.7% to 2,422p.