(Bloomberg) -- After a rough few months for Fevertree Drinks Plc, bullish analysts haven't lost the faith.
Morgan Stanley and Jefferies both published positive notes on Friday, shrugging aside the absence of a customary November guidance upgrade that led the U.K. premium tonic maker's shares to erase gains for the year.
Morgan Stanley analyst Richard Felton said there's “still plenty of scope” for results to beat estimates, calling the recent share-price tumble an attractive entry point. Market rules suggest that Fevertree would likely only need to issue a trading statement if it expected revenue to be at least 10 percent different to the current consensus estimate of 223 million pounds ($285 million), he wrote.
Jefferies' Ed Mundy suggested that Fevertree's U.K. sales could rise 40 percent to 50 percent in the second half of 2018, citing monthly data from Nielsen that showed growth slowing. The company's tone remains confident and a normalization of growth “was always expected,” Mundy wrote in a note.
Also helping sentiment was a new buy rating by Numis Securities analyst Damian McNeela earlier this week. Even though McNeela's price target of 3,450 pence is the lowest among analysts tracked by Bloomberg, it's still more than 40 percent higher than the current share price. Numis was appointed Fevertree's nominated advisor and joint broker last month.
Fevertree shares rose as much as 4.1 percent in London on Friday, gaining for a second day. Its 14-day relative-strength index has fallen below 30 several times in recent weeks, a level that technical analysts say frequently precedes a rebound.
To contact the reporter on this story: Lisa Pham in London at lpham14@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Paul Jarvis
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