Berenberg lowers target price on C&C Group following rights issue

Analysts at Berenberg lowered their target price on brewer C&C Group from 345.0p to 292.0p on Friday despite stating the group appeared to be positioning itself for recovery.

Berenberg stated C&C's 2021 full-year results, with weaker-than-expected net revenues of €737.0m a wider than anticipated group operating loss of €59.0m, was a clear sign that trading had been "significantly affected" by the Covid-19 pandemic.

The German bank, which reiterated its 'buy' rating on the stock, also highlighted that C&C's wholesale division was the driver of operating deleverage given its high fixed-cost base and 100% exposure to the UK on-trade.

However, Berenberg pointed out that the headline news in C&C's latest update was the announcement of a £151.0m fully underwritten rights issue, to be completed by 23 June.

"Although unexpected, it does not change our positive view on the prospects for the group as the economy reopens. We account for this rights issue and adjust our price target to 292.0p (exrights), accordingly," said the analysts.v