Bears Circle LaCroix Owner as Wall Street Sees an Uphill Battle

(Bloomberg) -- National Beverage Corp., the owner of LaCroix seltzer, spooked Wall Street a bit further after higher costs led to disappointing fourth-quarter results.

Analysts from Jefferies, UBS, and Maxim trimmed their estimates for fiscal 2020 amid concerns that the company’s turnaround efforts will likely be costly as the company spends to stabilize the LaCroix brand amid stiff competition. Results missed expectations partly because of a rise in aluminum prices, hurt by President Trump’s trade war, and higher manufacturing costs.

"We do not see this as a quick, inexpensive, or even certain turnaround," Jefferies analyst Kevin Grundy wrote in a note, calling the challenges an "uphill battle." He trimmed his fiscal 2020-2021 Ebitda estimate and reduced his price target to a Street-low $33 from $34.

With shares worth roughly a third of their peak in September, those betting against the company have raked in cash. More than 35% of shares available for trading are currently sold short, data compiled by analytics firm S3 Partners show, near the highest levels in more than a year.

Of the five analysts tracked by Bloomberg, only Imperial Capital recommends buying National Beverage shares. Jefferies’s Grundy and Guggenheim analyst Laurent Grandet both hold sell-equivalent ratings, with targets that imply roughly 20% downside from yesterday’s close.

National Beverage shares are down as much as 5% in early trading.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley

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