Berenberg has upgraded its rating for Magners cider maker C&C Group PLC (LON:CCR) to ‘hold’ from ‘sell’ citing valuation grounds after recent sharp falls and expectations that its funding levels should be sufficient to weather the coronavirus crisis.
The German bank, however, reduced its target price for the Dublin-headquartered group to 182p, down from 290p.
In morning trading on Thursday C&C shares were changing hands at 198.40p each, down 1% on Wednesday’s close.
In a note to clients, Berenberg’s analysts noted that C&C’s share price has fallen by around 50% from highs hit in early January since the government shut down the UK on-trade – eg. bars, restaurants and pubs – to help manage the effects of the coronavirus (COVID-19) pandemic.
They pointed out that this fall is understandable given that the on-trade represents around 80% of the group’s net sales.
The analysts said: “With the brewer withdrawing mid-term guidance and taking immediate actions in the debt market, investor focus has unsurprisingly been on short-term liquidity requirements.”
However, the analysts pointed out that, in response to this, they have drawn up a month-by-month cash flow model for full-year 2021 which they say illustrates why C&C’s funding levels should remain sufficient, despite undoubted immediate-term stresses.