Jefferies Sticks to Their Buy Rating for Cott Corp (COT)

By Carrie Williams

Jefferies analyst Kevin Grundy reiterated a Buy rating on Cott Corp (COTResearch Report) yesterday and set a price target of $21. The company’s shares closed yesterday at $15.82.

Grundy wrote:

“We reiterate our Buy rating and raise FY19-20 EBITDA 2-3% post strong 3Q18 results. COT delivered ~+4% org sales growth, better GM%, an EBITDA beat, and edged up its FY18 FCF guidance. The co.’s transformation to a more stable and higher growth/margin pure-play water / coffee biz is still not fully appreciated by the market. At 10x EV/EBITDA, COT trades at a 25% discount to business service peers, leaving adequate scope to re-rate. PT to $21 on group de-rating. Cott delivers a strong 3Q: Cott’s 3Q sales were 1% above consensus and better gross margins (+65 bps YoY, +25 bps vs. Street) helped drive 1.5% gross profit upside. A solid EBITDA beat (+3% vs. Street) and upside bias to guidance drove share price outperformance today (+240 bps vs. the XLP).”

According to TipRanks.com, Grundy is a 4-star analyst with an average return of 7.8% and a 63.9% success rate. Grundy covers the Consumer Goods sector, focusing on stocks such as Skyline Champion Corporation, Coca-Cola European Partners, and Constellation Brands Inc.

The word on The Street in general, suggests a Hold analyst consensus rating for Cott Corp.

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Based on Cott Corp’s latest earnings release for the quarter ending June 30, the company reported a quarterly net profit of $13.2 million. In comparison, last year the company had a net profit of $42.5 million.

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Cott Corp. (Canada) engages in the manufacture, process, and distribution of beverages. It operates through the following business segments: Route Based Srevices; Coffee, Tea, and Extract Solutions; and All Other. The Route Based Srevices segment includes Aquaterra and Eden businesses.