(By Balachander) Cott Corp. (NYSE: COT) (TSE: BSB) shares were upgraded to "Sector Outperformer" from "Sector Performer" by CIBC World Markets Inc. analyst Perry Caicco, who said the retailer brand beverage company is sitting on a potential sales rocket with its energy drink capabilities.
Caicco also raised price target on the stock to US$12.00 from US$8.00, a 50 percent upside. In addition, the analyst increased 2012 EPS estimate for the company to 64 US cents from 58 cents and 2013 EPS estimate to 86 cents from 78 cents.
"The Memorial Day weekend passed without any serious price action from the branded players, and it is likely that the Fourth of July weekend will remain rational," Caicco wrote in a note. "The big brands are focused more on marketing than pricing right now as they try to bring life back into the category."
The analyst said Cott's NA soft drink volumes in Q2 and Q3 may not be as deeply negative as he had predicted. The company's excellent margin management (shown in Q1) may be augmented by some softening in the resin price, he said.
Caicco said his new valuation gives more appropriate multiples to the juice business (lower) and the energy business (higher).
The stock, which has been trading in the range of $5.94 to $8.62 over the past year, added 3.07 percent to trade at $8.07 on the NYSE on Monday.