E-Malt.com News article: 2056

UK’s largest brewery, Scottish & Newcastle, has seen its price target raised. Credit Suisse First Boston upped its target from 360 pence a share to 380p on January 19. In a note, reported by Reuters, CSFB said it was leaving its rate unchanged at “neutral”. The investment bank said it felt that a merger could create potential for further gains in the share price, although any kind of merger was unlikely within the next 12 months.

The note also said: “With 80% of profits in Western Europe, we believe top-line growth in beer is limited. However, we expect a more aggressive attitude to cost-cutting, particularly in the UK business, to lead to margin upside and higher returns.”

Analysts at Merrill Lynch maintain their "sell" rating on Scottish & Newcastle Brewing. The target price has been raised from 291p to 320p, New Ratings said on January 19. In a research note published this morning, the analysts mention that the ongoing favorable conditions in the stock market warrant the current increase in the target price. The analysts express their concern regarding the company’s poor market position, acquisition risks, unimpressive stock valuation and significant near-term margin risks in Russia.

In December last year, the brewer reported a jump in half-year pre-tax profits of 8%, to £316m (US$544.7m), while turnover was up by 17% to £3,034m on beer volumes.


20 January, 2004