Deutsche Bank initiates coverage of Britvic at 'hold'

2nd Jun 2015 15:12

Deutsche Bank initiated coverage of Britvic at 'hold' with a 750p price target. It said the same three drivers of investment apply now as back in 2005 when the company launched its IPO, noting a top line driven by innovation, strong cost management, and opportunities for international expansion.Deutsche Bank said that much of the current upside in Britvic is reliant on the global franchise expansion of the Fruitshoot brand, particularly in the USA and India. But establishing strong franchises takes years, if not decades, cautioned DB."It also requires larger up front investments than currently being contemplated. We are more excited about the potential and real profits less far afield as both France and Ireland show real turnarounds after years of underperformance."The German bank expects future performance to be solid, but said there is "too much hope in the share price for more."The total shareholder return performance of Britvic since listing has been impressive, said Deutsche, highlighting a 19% annualized return, handily beating the midcap index and most of its staples peers on the FTSE 100."However, a large proportion of TSR has been driven by a re-rating of the stock on future earnings expectations. We expect Britvic to perform strong in its core operations, but don't put in a premium for international plans yet to be turned into profit."At 15:30, Britvic shares were down 0.1% at 742p.