Deutsche Bank Initiates Coverage Of Cott Corporation

Deutsche Bank initiated coverage of Cott Corporation COT with a $10 price target and a Buy rating. the August acquisition of private label juice leader Cliffstar is a significant strategic step forward. By gaining a large presence in juice, Cott is now more balanced from a product standpoint, better positioned with customers, and ultimately more consistently profitable. Deutsche Bank says deleveraging the balance sheet is the primary means of value creation in the short-to-intermediate term, while earnings consistency over time can advance the multiple. Investors should also expect a tailwind from positive US private label trend. Key risks include integration of Cliffstar, more aggressive price promotion/gaps in US soft drinks if category volumes remain weak, higher commodity costs, and slower deleveraging. Cott Corporation closed Monday at $7.68 and is trading up 4% in the premarket