Fever-Tree scales new heights - and the rally is far from over

Another chapter in the remarkable share price story of drinks firm Fever-Tree was written Tuesday following a typically bullish results performance.

The stock is now a spectacular 1,164% higher than when it first listed on AIM in November 2014, having benefited from consistently strong demand for its upmarket tonic waters and mixers in the UK and overseas.

This was shown in half-year results today, with revenues up 77% to £71.9 million and diluted earnings per share (EPS) more than double at 16.72p. As is now customary, co-founder and chief executive Tim Warrillow said that the company believes full-year results will be materially ahead of expectations.

This latest in a long line of profit upgrades ensured the stock rose another 12%, helped also by a 95% hike in the half-year dividend to 3.01p a share. Despite the continued share price surge, broker Investec thinks there's more to come.

Analyst Nicola Mallard upgraded her profits and EPS forecasts for this year and next by 24% and 25% respectively, while raising her target price to 2,220p.

She called the half-year performance "another blockbuster period" for Fever-Tree after UK sales jumped by 113%. However, she thinks the second half may well be slower due to less FX benefit, a strong pre-summer sell-in and a lack of visibility over Christmas.

Based in the UK, the brand was launched in 2005 to provide high quality mixers to meet growing demand for premium spirits, in particular gin, but also for vodka, rum and whisky.

The company now sells a range of carbonated mixers to hotels, restaurants, bars and cafes, as well as selected retail outlets. About 56% of the group's sales were overseas last year, with the key markets being the United States and Europe.

Its 150ml can format, which was launched in June 2015, now represents 40% of the UK off-trade. The range includes four tonic flavours and has recently been extended to include ginger ale and premium lemonade cans specifically for Virgin Atlantic's entire fleet.

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