Fever-Tree's 'buy' rating reiterated by Investec

Investec reiterated its ‘buy’ rating and target price of 740p for Fever-Tree on Monday after the carbonated drinks maker reported a jump in full year profit.

In the year to the end of December, pre-tax profit rose to £16.8m compared with £2.5m the previous year as revenue grew 71% to £59.3m.

Adjusted earnings before interest, taxes, depreciation and amortisation were up 82% to £18.2m and the company declared a final dividend of 2.3p per share, taking the total dividend to 2.08p from 0.30p in 2014.

Chief executive officer Tim Warrill said growth was strong across all four main geographical regions. He added the group has had an encouraging start to 2016 and look forward to the future with confidence.

“A strong year for Fever-Tree, with the leading UK performance cemented by some good off-trade success but also growing on-trade penetration,” said Investec analyst Nicola Mallard.

“Europe and the US also showed strong growth. However, there remain ample opportunities for further penetration gains in all geographies and in both on- and off-trade channels.”

Investec made no change to forecasts for 2016 and 2017 earnings. The analyst said there was a degree of positive momentum from annualising some of last year’s positive events such its launch of mini cans.

“However, the group also secured some good promotional slots in the period which it cannot count on repeating,” Mallard said.

“We think the group can deliver underlying growth of c£10-12m per annum. Growth over and above this will be determined by sizeable wins in the off-trade, although these are less predictable. Hence, we will update forecasts as and when necessary if the group is successful in adding a number of these.”

Shares rose 0.47% to 584.72p at 1242 GMT.