Imperial Thinks The Top Will Pop On National Beverage, Initiates With Buy

National Beverage Corp. (NASDAQ: FIZZ) had a strong run in 2017, with its stock striking all-time highs in the back half of the year. Although the stock has since conceded 28 percent of its top, one analyst said it’s worth craving.

The Rating

Imperial Capital analyst George Kelly initiated coverage on National Beverage with an Outperform rating and $125 price target.

The Thesis

Competition and materials pricing are seen to have driven the sell-off in National Beverage’s stock.

“A series of what we consider to be overblown negative ‘issues’ have given us and investors another compelling entrypoint,” Kelly said in a Monday note.

“In the quarters ahead, we believe FIZZ will benefit from continued growth in the end market, potential upside to earnings and valuation, and disciplined capital allocation.”

The analyst said he considers consensus estimates conservative. 

As the stock trades below peers, recent buyout prices and millennial-focused brands, Kelly predicts 40-percent upside.

The anticipated rise is based partly on perceived tailwinds for National Beverage’s LaCroix, which Kelly considers the leading sparkling water brand with market outperformance driven by “impressive” growth.

Price Action

National Beverage shares were up more than 4 percent at the time of publication Monday morning. 

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