Deutsche Bank is bullish on these two European beverage stocks
Deutsche Bank started off coverage on two global beverage stocks with a bull rating. British soft drink and energy drink manufacturer A.G. Barr p.l.c. (OTCPK:BAGFF) and British premium drink mix producer Fevertree Drinks PLC (OTCPK:FQVTF) (OTCPK:FQVTF) were both initiated with Buy ratings.
Analyst Deirdre Mullaney said a combination of organic growth and a solid M&A track record has helped transform AG Barr (OTCPK:BAGFF) into a multi-beverage business with a presence in all key soft drink categories. “This strategy has expanded the portfolio beyond the core soft drinks brands into high growth categories such as RTD cocktails and functional beverages,” noted Mullaney. The firm thinks that A.G. Barr has an attractive medium term growth profile due in part to numerous self-help margin levers. “We think our forecasts of 4.4% sales CAGR and 11% adj operating profit CAGR across FY25-28e look well underpinned, reflecting an easing inflationary backdrop, in-housing of Boost production, ongoing cost initiatives and efficiency gains from investments made into the asset base and proposed business reorganization,” highlighted Mullaney.
Meanwhile, Deutsche Bank analyst Damian McNeela thinks Fevertree’s investment thesis is underpinned by a leading position in the premiumization of the global mixer category. McNeela said the firm believes in the long-term premiumization opportunity and thinks the company is well positioned given its first-mover advantage, strong brand credentials, high-quality products, and capital-light business model.
A.G. Barr (OTCPK:BAGFF) traded down 0.20% in London trading on Tuesday, while Fevertree Drinks PLC (OTCPK:FQVTF) was up 3.15%.