LONDON (ShareCast) - (Sharecast News) - Shore Capital upgraded its stance on Vimto maker Nichols to 'hold' from 'sell' on Thursday following a de-rating and as the company put out its interim results.
Analyst Phil Carroll said the results were "solid".

"Overall, whilst the international division performance is subdued this has been more than offset by strong UK performance where the balance of the division seems to be improving with a strong performance from Out of Home alongside the continued momentum in the Vimto brand."

ShoreCap left its full-year forecasts unchanged. The brokerage is looking for FY2018F pre-tax profit of £31.6m, growth of 3.6% year-on-year, which equates to earnings per share of 69.4p, growth of 2.5%.

"This puts the shares on a valuation of 21.6x price-to-earnings and an EV/EBITDA ratio of 15.5x with a dividend yield of 2.5%. We believe the company is demonstrating its resilience and following a de-rating we now upgrade our sell recommendation."

In an update for the half year to 30 June, Nichols said pre-tax profit rose 2.7% to £13.1m on revenue of £65m, up 2.3% on the same period a year ago. Earnings per share rose to 28.81p from 27.67p and the group declared an interim dividend of 11.3p, up 11.9% on the same period last year.

Sales in the UK jumped 12.3% to £53.8m, with the Vimto brand continuing to "significantly" outperform the market. Sales of Vimto were up 9% year to date compared to a 3.7% increase in the total UK soft drinks market.

In addition, the Out of Home business also grew strongly, with revenue up 13.6% thanks to dispense and frozen product sales.

At 1252 BST, Nichols shares were up 0.8% to 1,500p.

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