Fevertree Erases Year’s Gains as Analyst Warns of ‘Gin Fatigue’

(Bloomberg) -- Fevertree Drinks Plc briefly erased its advance for the year after Jefferies cut its price target to a new Street-low, saying that poor weather and “U.K. gin fatigue” may hurt first-half results.

The shares fell as much as 6.5% to 2,186 pence, the lowest since Dec. 27 on a closing basis. They were down 5.4% as of 10:19 a.m. in London.

While Fevertree has “good momentum” in the U.S., gains are normalizing in the U.K. and there are signs of “moderating gin growth” in markets such as Spain and Belgium, Jefferies analyst Edward Mundy wrote in a note Thursday. Mixed weather is adding to the less-favorable picture, said Mundy, whose new price target of 2,700 pence is the lowest among analysts tracked by Bloomberg.

Mundy observed in a note two months ago that there were signs that the boom in gin's popularity may have peaked, after an “explosion” in more exotic flavors.

Jefferies isn't alone in turning more cautious on Fevertree. Lone Pine Capital LLC increased its short position to 1.08 million shares, or 0.93% of the company's stock as of June 28, according to data sourced from regulatory disclosures. Fevertree is due to report first-half results on July 23, according to its website.

To contact the reporter on this story: Lisa Pham in London at lpham14@bloomberg.net

To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, John Viljoen, Jon Menon

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