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Fever-Tree shareholders enjoy welcome tonic as revenues fizz
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Fever-Tree shareholders enjoy welcome tonic as revenues fizz

Story Highlights

Tonic company Fever-Tree reported results which restored some hope to its shareholders.

Fever-Tree (GB:FEVR) reported revenue growth of 14% in its half-year results for the fiscal year 2022, despite difficulties with supply and inflation.

Revenues of £161 million reflected a strong recovery in consumer demand. Revenues in Europe grew by 27%, followed by the U.S. at 11%.

The company continues to face the pressure of rising costs, which squeezed its gross margin to 37.4% from 44.1% last year. The company’s pre-tax profits fell by 30% to £17.6 million.

The company has been struggling with higher costs since last year and even issued a profit warning in July 2022. A shortage of labour in some of its manufacturing plants in the US was offset by the stock produced in the UK, leading to higher logistics costs.

Shares went up by 5.3% yesterday, although the company’s stock had been trading down by 65% so far this year.

Liberum, the investment bank, said, “the company’s foothold in international markets continues to be a source of optimism for the stock.”

What drinks does Fever-Tree make?

Fever-Tree is a UK-based manufacturer of a premium range of drink mixers and tonic waters.

The product range includes ginger beer, ginger ale, sparkling, and soda.

Is Fever-Tree stock a buy?

According to TipRanks’ analyst rating consensus, Fevertree stock has a Hold rating based on one Buy, nine Hold, and three Sell recommendations.

The FEVR target price is 1,129.3p, which is 19% higher than the current level. The analyst price targets range from a low of 825p to a high of 1,717.5p.

Conclusion

The company expects higher cost pressures in the second half of 2022, but management is optimistic about the recently announced measures to reduce energy bills for businesses and expects rising costs to ease out in the future.

Analysts at Numis said, “Overall, the tone is positive, highlighting that underlying demand in key growth markets remains strong.”

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