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Fevertree shoots higher on bid speculation and broker 'buy' recommendation

By Oliver Haill

Date: Friday 19 Jan 2018

Fevertree shoots higher on bid speculation and broker 'buy' recommendation

(ShareCast News) - Fevertree Drinks is in a "unique" position to capitalise on the 'premiumisation' or 'gin-naissance' trends in the drink industry, analysts believe, leading to rumours on Friday that the company may be a takeover target.
Shares in Fevertree were boosted by reports that consumer goods colossus Unilever was looking to buy Fevertree, while analysts at Jefferies also began coverage of the London-listed company with a 'buy' recommendation.

Unilever will try to snap up the mixers maker for "at least £28 per share", the Telegraph reported, with rumours rising after Fevertree appointed Kevin Havelock, Unilever's global president of refreshment, as a non-executive director last week.

Jefferies, on Friday began coverage of the upmarket mixers maker with a 3,000p target price, said the company was a "unique asset that offers a leveraged play on premiumisation trends in spirits in a sub-category where there is a disconnect between premium spirits and mixers".

The structural driver of the consumer trend towards more 'premium' spirits sees people seeking to drink 'better not more' and prepared to pay a premium for high-quality brands.

London-listed Fevertree offers a "better way to participate in the gin-naissance than the spirits majors given craft/fragmentation trends", with the trend having not yet spread from premium spirits to mixers.

"We see an on-going disconnect between growth in the large premium spirits category and an increasingly commoditised mixers category. The mixers category remains ripe for mass disruption, in our view."

Jefferies analysts see growth in tonics driving a standalone value per share of 2,500p and then shake and stir in a further 500p on what they see as a 20% probability Fevertree can capitalise on the non-tonic mixers category.


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