Fever-Tree shareholders enjoy a welcome tonic as earnings sparkle

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fever tree (GB: FEB) reported 14% revenue growth in its half-year results for fiscal 2022, despite supply and inflation challenges.

Revenue of £161m reflects a strong recovery in consumer demand. Revenues in Europe increased 27%, followed by the United States at 11%.

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

The company has been grappling with higher costs since last year and even issued a profit warning in July 2022. A labor shortage at some of its manufacturing plants in the United States has been compensated by the stock produced in the United Kingdom, leading to an increase in logistics costs.

Shares rose 5.3% yesterday, although shares of the company are down 65% so far this year.

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

What drinks does Fever-Tree make?

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

The product line includes ginger beer, ginger ale, bubbly and soda.

Is Fever-Tree stock a buy?

According to TipRanks analyst rating consensus, Fevertree stock has a hold rating based on one recommendation to buy, nine to hold and three to sell.

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

Conclusion

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

Numis analysts said: “Overall the tone is positive, underscoring that underlying demand in key growth markets remains strong.”

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