Fever-Tree (AO) | Hold | Positive trading statement

Research evidence excerpt

Fever-Tree (AO) | Hold | Positive trading statement

Fever-Tree Hold | Target Price: 900p

Company description Management

Fever-Tree is a leading global producer of premium mixers for alcoholic spirits. Domenic de Lorenzo, Chairman

The group has a solid track record of double-digit historical growth. Based in the Tim Warrillow, CEO

UK, it has distinguished itself by using organic ingredients, innovation, and Andy Branchflower, CFO

strategic partnerships. The company was founded in 2005 by Tim Warrillow and Key shareholders

Charles Rolls. Fever-Tree’s most important market is the US, closely followed by Free float 95.20%

the UK. In the US, Fever-Tree works in a partnership with Molson Coors. Lindsell Train 10.00%

Molson Coors 9.10%

Fundsmith 5.30%

Investment case Valuation methodology

Fever-Tree has a strong historical growth track record. The US We value Fever-Tree using a DCF model. Valuation shows the

partnership with Molson Coors will drive group growth towards greatest sensitivity to top-line growth

double-digit levels in the years to come. Still, profitability will In our DCF model, we assume a perpetual growth rate of 2.5%, a

have to be shared with Molson Coors and remain under pressure long-term EBIT margin of 14.1% and a WACC of 9.4%.

in the near term as investments in marketing are increased. Valuation multiples have been volatile in the past, and also

The non-US business should report modest growth, but show a strong correlation with revenue growth.

attractive margin improvement on price increases and Risks to our rating

favourable input cost trends. Overall group EBITDA and net Different growth rate in the US compared to expectations.

profit growth should be in the low double-digit levels. Major change in input cost trends.