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Britvic price target upgraded by HSBC analysts

Britvic shares rose on Thursday after equity analysts at HSBC increased the beverages group price target.

HSBC Global Research increased their price target from 970p to 990p, citing scale opportunities in Brazil and a strong position in Great Britain.

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Analysts highlighted Brazil as Britvic’s growth engine and the potential for the company to increase its presence in the juice and energy drinks market.

Brazil is the world’s 6th largest beverages market, roughly 1.5x larger than the UK, where Britvic is more established and achieves better margins.

The impact of material costs and pricing in Brazil means Britvic’s profit per litre is 12p, significantly lower than 24p in Great Britain and 27p in other international markets.

HSBC notes Britvic’s presence in Brazil is marginal and offers the opportunity to scale operations. Britvic has recently acquired Brazilian company Extra Power expanding their footprint in the country after first entering in 2015.

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HSBC’s 990p price target is based on average DCF, EV/EBITDA, and PE multiple forecasts.

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