The drinks company’s chart is simply dreamy. Building on an incredibly successful 2017, the stock opened at £23.36, and hasn’t really stopped climbing since. A few very minor wobbles aside, the firm has seen an astoundingly strong run of form, propelling Fevertree Drinks PLC to a current trading price, and all-time high, of £36.14. That’s a near 55% surge in the last 6 and a half months.
Interestingly, mid-March’s full year results showed the kind reaction Fevertree might receive next week if it can’t match investors’ dizzying expectations. So accustomed have the markets become to the company posting big time growth, that a report containing a 66% rise in revenue to £170.2 million and a whopping 64% increase in pre-tax profit to £56.4 million dragged the stock 5% lower on the day of the release.
Investors instead chose to focus on the fall in gross profit margin, which slipped from 55.2% to 53.5%, the decline ‘primarily drive by an expected increase in product costs following the decision to introduce a new, bespoke glass bottle in the second half of 2016’. News of an ‘encouraging’ start to 2017 also left investors feeling dissatisfied, being used to more flashy verbiage from Fevertree.
A sense of disappointment also greeted May’s brief AGM statement, with the company dipping on a comment stating that the firm was just trading in line ‘with market expectations’. Investors had been looking for a profit guidance upgrade – something that had happened in 12 of the firm’s trading updates since 2014.
In terms of Tuesday’s half year results, the main focus might be on Fevertree’s international situation, given Jefferies highlighted a potential premium drinks push into the US when it hiked the company’s target price back in June. The company’s full year figures in March revealed that Fevertree had seen a 36% rise in US sales on a constant currency basis, as well as the announcement of a North American office in New York.
Fevertree Drinks PLC (LON:FEVR) has a consensus rating of ‘Buy’ alongside an average target price of £30.30.
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