Berenberg raises target price on brewer C&C Group

Berenberg said C&C's results for the year ended 29 February, largely pre-Covid-19, beat consensus by 1% on group organic profit growth. However, Berenberg questioned the fact that despite the solid showing, no new guidance was given for 2021.

As such, to help gauge the shape of C&C following the lockdown, the analysts took a closer look at its state upon entering lockdown.

"In combination with company commentary on April and May trading conditions, we note that not only did the group’s core markets enter lockdown under pressure, but off-trade volumes have not offset the near-total shutdown of the on-trade during it (c80% of C&C’s FY20 net sales)," said Berenberg.

However, the German bank said the shares were "cheap" on a 10.8x enterprise value to earnings before income and tax ratio for calendar year 2021, even after the 20% rally since C&C's full-year results.

"However, we remain holders, as questions remain about who will become the new CEO, the pace and shape of the UK recovery, as well as the margin implications of the company’s increasing focus on the UK off-trade."