- EF Hutton analyst Michael Albanese reiterated a Buy rating on the shares of Splash Beverage Group Inc SBEV and lowered the price target from $5 to $3.
- The analyst said Splash Beverage is a fast-growing player in the beverage industry with exciting prospects across its brand portfolio.
- The analyst added that the company's strategy is to develop and rapidly accelerate its current portfolio and acquire and develop new early-stage brands.
- Splash Beverage is led by a management team with significant prior experience managing top brands in the beverage industry from product launch to billions of dollars in annual revenue, said the analyst.
- The analyst added that management understands that well-established distribution is key to the company's growth.
- During 3Q22, Splash Beverage added nine new distribution/sales agreements with distributors and retailers and continues to scale quickly, the analyst noted.
- Although still in the early stage, the analyst believes that major distribution wins are driving an acceleration in sales.
- The analyst assumes additional upside optionality from the eco-friendly CartoCan, a biodegradable can that was acquired in the Pulpoloco acquisition.
- Splash Beverage maintains exclusive North American rights to the CartoCan and the analyst believes there may be opportunities to roll this product out across its brand portfolio or monetize the asset through co-packing arrangements.
- The analyst has reduced the price target due to a reduction in 2023 sales estimates, as well as greater share count outstanding.
- The analyst's valuation multiple represents a slight discount to the broader beverage universe, given that the company is still in the early innings of its aggressive rollout strategy, is not yet profitable, and may need to access the capital markets for additional growth capital.
- The analyst expects continued significant top-line growth driven by its experienced management team and expanding distribution channels.
- Price Action: SBEV shares are trading higher by 0.03% at $0.99 on the last check Friday.
- Photo Via Company
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