Midtown Partners Reiterates on Reed's on Good Market Position of Ginger Brew
In a report published Thursday, Midtown Partners & Co. analyst Alec I. Jaslow reiterated a Strong Buy rating and $8.18 price target on Reed's (NYSE: REED).
In the report, Midtown Partners & Co. noted, “Reed's original ginger brew is very well positioned in the functional drinks market which was valued at around $22B in 2011 and grew at a compound annual growth rate (CAGR) of 4.7% between 2007 and 2011. Increased awareness about the negative effects of sodas on health and the perception of health benefits of alternatives, has sparked the growth of functional drinks (according to the Marketline) to grow at a CAGR of 10.4% for the period between 2011-2016 ( $37B market size). Currently Reed's ginger brew and Virgil's root beer segments represent approximately 70% of sales or 28M (LTM Basis) of Reed's revenue. Reed's continued to attract customers in with their product differentiation evident from their 18% revenue growth over the last 6 years (2007-2012). To get a better sense of Reed's penetration with customers, we analyzed customer reviews from The Ginger Ale Authority. From this we found Reed's is known for its potent ginger flavor and health benefits and Reed's products sell at premiums to most competitors. In addition, Reed's Extra Ginger Brew has been the number one selling natural foods beverage product for about 15 years.”
Reed's closed on Wednesday at $6.79.
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