Goldman downgrades Britvic on weaker outlook

2nd Dec 2016 11:13

(ShareCast News) - Goldman Sachs downgraded drinks maker Britvic to 'neutral' from 'buy' and slashed the price target to 600p from 810p, removing the stock from its 'conviction list' following the full-year results earlier this week.It said that while the numbers were better than it had expected, it is concerned about the outlook going into full-year 2017, given rising input cost pressures.GS noted that since being added to the buy list on 4 December 2014, the shares are down 15.7% versus the FTSE World Europe up 5.5%. Since being added to the 'conviction list' on 29 January 2015, the stock is down 21% versus the FTSE World Europe up 3.7%.Goldman reckons this underperformance was driven by difficult trading conditions in GB, and health concerns around sugar.The bank cut its FY2017-19 earnings per share estimates by 4%, 8% and 8% to 46.67p, 47.91p and 50.97p, respectively."We believe Britvic faces downside risks from input cost inflation in the UK, as well as the UK regulation on soft drinks with added sugar; this was indicated by the FY17 guidance, which implies flat performance versus the 52-week adjusted EBITA reported in FY16, although we still see upside from the US and Brazil businesses."At 1120 GMT, Britvic shares were down 1.9% to 532p.