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Investing.com -- Fevertree Drinks PLC (LON:FEVR) stock rose 5.5% following a Jefferies upgrade to "Buy" from a previous neutral stance, with analysts citing the company’s recent deal with Molson Coors Beverage Company (NYSE:TAP) as a catalyst for accelerating growth.
Jefferies raised its price target to £11, highlighting that the TAP partnership will significantly enhance Fever-Tree’s scale and execution capabilities in the U.S. market while reducing supply chain risks.
The deal is expected to free up resources for Fever-Tree to focus on brand building and innovation.
According to Jefferies, the investment case for Fever-Tree today differs substantially from when the firm initiated coverage in 2016. The company now benefits from stronger route-to-market in the U.S., plans to double marketing investment, and local production that reduces supply chain volatility.
Analysts noted that Molson Coors has strong motivation for the partnership to succeed, as the beer giant’s core portfolio faces pressure in the U.S. market. TAP’s strategic plan focuses on premiumizing its portfolio and expanding beyond beer, with Fever-Tree supporting both initiatives.
Jefferies estimates that success with Fever-Tree could add more than 200 basis points to TAP’s U.S. growth over three years.
The firm compared the alignment between TAP and Fever-Tree to Heineken’s successful partnership with CR Beer in China, suggesting similar potential for growth.
Jefferies also highlighted Fever-Tree’s increasingly asset-light model and growing cash reserves, with £70 million already returned via buybacks and another £60 million planned through 2026, signaling confidence in margin recovery and sustained cash flow.