Susquehanna Sticks Up For National Beverage After Pullback

National Beverage Corp. FIZZ's fiscal third quarter earnings report sent the stock notably lower, a move that's unjustified and reinforces the bullish case over the longer term, according to Susquehanna.

The Analyst

Susquehanna Financial Group's Pablo Zuanic maintains a Positive rating on National Beverage's stock, with a price target lowered from $166 to $148.

The Thesis

Many aspects of National Beverage's earnings report were misunderstood by investors, which should signal "significant upside" for the stock, Zuanic said in a note. These include sales rising 17 percent in the quarter, and category growth accelerated which could grow even more from the launch of Bubly.

National Beverage's stock (excluding net cash) per share the stock is trading at 18.3 times the analyst's CY2019 EPS estimate of $4.62, which implies there is "clear value" for investors at current levels. The company continues to grow sales at a mid-to-high teens but a reduction in the stock's price target is justified due to a lower likelihood of a takeout and ongoing expectations for a competitive market which calls into question future market share and profit margin trends.

Price Action

Shares of National Beverage were trading higher by 1.7 percent Tuesday at $92.99.

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