Britvic fizzes higher on Jefferies upgrade
Jefferies upgraded its stance on shares of drinks maker Britvic to ‘buy’ from ‘hold’ on Friday, lifting the price target to 1,000p from 880p as it said the market under-estimates its growth potential.
The bank said its buy case is built on 10 strategic priorities and growth levers. These include improving investor confidence, improving free cash flow, stronger revenue growth, a turnaround in Brazil and M&A/capital returns optionality.
"We see upside risk to street expectations beyond F19 as well as opportunity for re-rating," it said.
Jefferies expects Britvic’s capital markets day on 9 October to provide more granularity on the growth agenda "as the company harvests benefits of the multi-year production footprint/capability upgrade".
It noted that this will the first time in years that the company hosts a CMD, including a visit to its flagship manufacturing site at Rugby.
"We believe the decision to schedule a CMD points to the company's confidence in the next leg of the story. We expect the day to be focused on explaining the revenue opportunity on the back of the business capability programme (BCP)."
Jefferies noted that the BCP has not only optimised the cost base but also laid the foundation for accelerated value creation with greater product and pack flexibility.
It also said that improving free cash flow conversion opens the door for a buyback in the medium turn which is worth to 3% to earnings per share.
At 0930 BST, the shares were up 2.9% at 925.50p.