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Broker News: Drinks anyone?

01 February 2017 14:35

Today's trading update from soft drinks maker AG Barr (LON:BAG) received a mixed response from City analysts, despite being generally in line with expectations and highlighting a second half rebound in sales growth.

Leaving its hold rating and 600 pence price target unchanged, Whitman Howard commented:

"Overall, this was a robust statement which tends to confirm the benefits of having strong UK soft drinks brands in both carbonates and stills.

N+1 Singer upgraded its recommendation to hold saying that its sell stance in 2016 served it well but the shares are now trading close to its revised target of 500 pence (up from 475 pence).

Invested said: "Barr flags another challenging year ahead, with an uncertain economic environment and rising costs.

"However, we believe it is progressing with cost recovery and has a well-invested business and differentiated brands with which to continue to deliver value to shareholders."

The broker reiterated its buy rating and left its target unchanged at 640 pence a share, implying a forecast total return of over 30%.

Elsewhere, Morgan Stanley reiterated its overweight recommendation on Johnnie Walker-owner Diageo (LON:DGE) after reflecting on the group's first half results.

Analyst Olivier Nicolai said: "We see upside to consensus expectations driven by an acceleration in organic sales growth, positive FX impact and organic margin improvement."

Jefferies also remained upbeat and repeated its buy rating and 2,500 pence price target, focusing on the company's planned comeback in the Irish whiskey market through the launch of premium brand Roe & Co.

However, the broker pointed out that the brand will only form part of Diageo's Reserve portfolio with roll-out focused on Europe initially and as such does not view the launch as an attempt to take-on Jameson directly in the US.

At 2:35pm:

(LON:BAG) Barr A G PLC share price was +9.75p at 511.75p

(LON:DGE) Diageo PLC share price was -13.75p at 2189.75p

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