Fevertree share price: where next ahead of its H1 earnings?

• Fevertree delivers resilient performance amid Covid-19, reflected in its share price
• Analysts at Barclays believe stock could hit £25 per share
• Fevertree confident it can deliver on its full-year 2020 outlook

Fevertree Drinks PLC is set to unveil its half-year (H1) results on 8 September, with the company delivering a relatively resilient performance despite the economic fallout from Covid-19, which has been reflected in its share price.

As it stands, the maker of premium carbonated mixers is trading 1% higher year-to-date, beating the broader market with the FTSE 100 still down 22% over the same period.

Investors are eager for an update on the company’s performance, with Fevertree’s stock capable of pushing to higher highs this year if it is able to deliver on its full-year 2020 outlook.

Analysts at Barclays believe stock could hit £25 per share

Analysts at Barclays are confident that the company will make good on its ambitions this year, with the bank reiterating its ‘overweight’ rating for the stock and issuing a target price of £25.

Based on Fevertree closing at £21.20 on Monday, analysts at Barclays believe the stock has a potential upside of 18%.

Fevertree confident it can deliver on FY20 outlook

The drinks maker had a solid start to the year, with trading in the first two months falling in-line with its expectations. However, from March onwards, trading across its regions was dominated by the economic fallout from Covid-19, leading to widespread closures of its on-trade business, though its off-trade channels continued to deliver a strong performance.

In fact, Fevertree’s off-trade revenues (sales occurring in supermarkets and convenience stores etc…) for the last 12 weeks to 14 June increased 34% year-on-year s the popularity of long mixed drinks as an everyday affordable treat continues to resonate with consumers.

‘As previously highlighted, the changes in channel and territory mix resulting from Covid-19 are expected to lead to gross margin headwinds during this financial year,’ Fevertree said.

‘However, we remain committed to our planned investments, particularly in marketing, and therefore intend to maintain our budgeted circa £60 million of operational costs for the full year, enabled by the group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth.’

Acquisition of GDP crucial to optimise performance in Germany

Earlier this year, Fevertree announced its acquisition of Global Drinks Partnership (GDP), the group’s sales agent in Germany.

‘The completion of the GDP acquisition is an important step as we execute our growth plans in Germany, providing us with an ideal platform to take advantage of the opportunity within the German market and accelerate our growth,’ Fevertree CEO Tim Warrillow said.

‘I have worked closely with Morgan Zuill and his team at GDP since we first entered the German market and have been impressed with their approach and expertise in growing the Fever-Tree brand, so I am delighted that they are joining the Fever-Tree team,’ he added.

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