The stock market has been under pressure this week, but that doesn’t mean the prospects for every company have diminished. Rather, this FTSE 250 share still has a rosy outlook according to the experts, with the consensus view for a rebound after a sharp decline over the past year. Here are the details!
A fallen angel?
I’m talking about C&C Group (LSE:CCR). The company owns some of the best-known drinks brands in the UK and Ireland, including Magners and Bulmers. It’s also one of the largest drinks distributors across the UK and Ireland, making up the majority of group revenue.
However, over the past year the share price is down 44%. Investors have been worried about a combination of weak consumer spending, a struggling hospitality sector and lower group revenues. In the latest full-year results, revenue fell 5.7%, and EBITDA declined nearly 8%, reinforcing concerns that growth had stalled. One factor in this was the loss of a Budweiser distribution contract in Ireland. But with the stock now at the lowest level since 2009, the experts think it could be a buying opportunity.
Looking at the future
Of the six analysts currently covering the stock that I can access, the average forecast for the coming year is 158p. Based on the current share price of 97p, this represents a 63% potential rally over the period. In terms of notable contributors, both the teams at Barclays and Deutsche Bank are targeting 150p.
When I step back and look at the company’s fundamentals, I think the business may be healthier than the market appreciates. Core brands including Bulmers and Tennent’s continued to grow revenue and gain market share. The company has also spent the past two years fixing operational issues that damaged investor confidence, including accounting problems and a failed systems integration programme. What I’m trying to say is that a lot of bad news is already factored into the current stock price.
CEO Roger White commented in the latest update that “we anticipate a series of exciting brand initiatives and a strong promotional programme across the key summer months.” These actions could help to provide a catalyst to encourage investors to look to buy the potential dip in the stock for long-term gains.
A subjective view
It’s true that analyst forecasts shouldn’t be taken as fact. After all, they’re looking at the same public information that we are. There’s no guarantee C&C will rally in the coming year. I believe the stock could do well, based on my own research and opinion, so I am seriously thinking about adding it to my portfolio. But there are risks involved, so it’s up to each investor to gather the facts and decide for themselves whether it’s a company they’d want to consider buying.
Should you invest £5,000 in C&c Group Plc right now?
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Jon Smith has no positions in the shares mentioned.
