- Shares have been very volatile
- Price increases and encouraging 2023 trading
- Potential for analyst upgrades
Posh tonics maker Fevertree Drinks (FEVR:AIM ) is due to provide a trading update next week to accompany its annual general meeting on 25 May.
The company has given investors a wild ride over the last year, with the shares falling around 45% from May 2022 to September’s low of 821p, before staging a huge 75% rally to end up marginally below where they started at £14.44.
Consensus 2023 earnings forecasts have dropped by around 60% over the last year according to Refinitiv data as the company flagged rising raw materials and freight costs.
The strong performance over the last few months will be welcome relief for Nick Train, manager of Finsbury Growth & Income (FGT) who described Fevertree as the ‘biggest embarrassment’ in his portfolio of underperforming global consumer brands in 2022.
But the manager is sticking to his guns and remains optimistic following FeverTree’s strong progress in the US where earnings have grown around 25% a year since launching in 2015.
ENCOURAGING SIGNS
At the 2022 full year results (23 March), management reiterated full year guidance which sees sales of £390 million to £405 million and EBITDA (earnings before interest, depreciation, and amortisation) of between £36 million and £42 million.
Investors were buoyed by news the company plans to increase prices to mitigate inflationary pressures and ramp US production.
They were also comforted to hear that trading in 2023 had got off to an encouraging start.
If the company can demonstrate continued momentum and provide a positive trading update next week there is potential for upward revisions to analysts’ forecasts which sit at the bottom end of the company’s guided range.
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