UPDATE: BMO Capital Markets Initiates Coverage on Cott with Market Perform Rating, $10 PT on Private-Label Discount

In a report published Wednesday, BMO Capital Markets analyst Amit Sharma initiated coverage on Cott COT with a Market Perform rating and $10.00 price target.

In the report, BMO Capital Markets noted, “We are initiating coverage of Cott with a Market Perform rating and price target of $9.50. Cott's leading share of the North American private label CSD and juice categories coupled with its long-standing relationships with top retailers and an extensive manufacturing footprint makes it a key strategic partner in the nonalcoholic beverage segment. Cott has implemented a number of structural measures over the last 12-18 months (e.g., broader product portfolio and customer base, cost cutting initiatives, lower financial leverage, systematic commodities hedging) to significantly lower its financial and operational risk profile and improve the predictability of its operating performance; however, our rating reflects our view that 1) Cott's high – albeit declining – exposure to the no/low growth North American CSD segment, high commodities exposure, and lack of pricing power structurally limits its growth and margin improvement opportunities; and 2) its three multiple points valuation expansion, over the last 9-12 months, adequately reflects the expected benefits from planned structural improvements.”

Cott closed on Tuesday at $8.78.