In its second-quarter earnings print, National Beverages Corp. (NASDAQ: FIZZ) demonstrated scanner data points in-line with expectations, with encouragement from management surrounding overall restored activity.
Guggenheim analyst Laurent Grandet upgraded National Beverage from Sell to Neutral and raised the price target from $83 to $86.
Susquehanna analyst Pablo Zuanic maintained a Positive rating for National Beverage and lowered the price target from $118 to $112.
Branded volume increased over 8 percent, while revenue per case rose 5.7 percent.
“The price increases for Lacroix averaged +6% for the four weeks through 11/18, but volumes fell 7.1%. With few peers following, the elasticity is of concern, especially keeping in mind the potential effect on margins from operating deleverage," Zuanic wrote in a note.
Inventories increased by 19 percent quarter-over-quarter, but revenue fell 11 percent. This clearly represents a significant deceleration in sales, Zuanic said.
It's unclear as to whether the sales trends will recover after this quarter, Grandet said.
“Management said...that daily orders have returned to normalized August levels, but we think it will be difficult to accurately assess the damage done to the brand until this spring when display and promotion activity steps up again.”
Since September, National Beverage stock has fallen about 30 percent, signifying the increased opportunity for potential acquisition options, Grandet said.
“That being said, we think it's very unlikely that a domestic manufacturer would be interested in the entire company – suggesting management must be willing to sell the standalone LaCroix brand," Grandet wrote in a note. “Alternatively, we think LaCroix could benefit from partnering with another industry player like KDP to gain distribution in the cstore channel via a strong DSD system.”
National Beverages was up 2 percent to $86 per share at time of publication Friday.
Imperial Thinks The Top Will Pop On National Beverage, Initiates With Buy
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|Dec 2018||UBS||Initiates Coverage On||Sell|
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