C&C Group rallies on Berenberg upgrade to 'buy'

Berenberg upped its stance on shares of drinks company C&C Group to ‘buy’ from ‘hold’ on Wednesday, hiking the price target to 345p from 181p as it pointed to "catalysts galore" for the branded portfolio.

The bank noted that C&C - which owns the Bulmers and Magners brands, among others - is the only name in its beverages coverage trading below pre-pandemic levels, lagging its closest peer in terms of performance by 14%.

"This seems peculiar to us given the brewer is on the cusp of some of the strongest years of growth it has ever had, in our view.

"We think there is a perfect storm of macro and micro tailwinds arriving for the group and sit 10% above consensus for FY23 EBIT pre-exceptionals; however, this is still circa 7% below pre-pandemic levels."

Berenberg said consensus, which is around 20% below pre-pandemic levels for FY23 EBIT, "vastly" underestimates the opportunity ahead, particularly given C&C is 80% exposed on group net sales to the recovering higher-margin on-trade channel.

The bank also highlighted several catalysts for the branded portfolio.

"FY22/23 contain numerous micro tailwinds for the branded portfolio: a freeze on the scheduled increases in beer and cider duty payments, the European Football Championships, minimum unit pricing in Ireland and a return of the seasonally important summer period for cider," it said.

"All these should reinvigorate growth and provide circa 25% net sales CAGR (compound annual growth rate) FY21-24E for this segment of the business."

At 1030 BST, the shares were up 5.1% at 309p.