Cott Corp. (COT), one of the world's largest soft drink makers, recently completed an equity offering of US$50-million, enough for UBS to raise its rating on the company.
Kaumil Gajrawala, analyst with UBS, first downgraded Cott to Neutral despite improving underlying trends in its second quarter earnings on concerns the equity offering would put pressure on shares. However, he has since changed his mind after the company's shares pulled back about 25%.
He said in a note to clients:
We are upgrading our rating on Cott shares to a Buy rating due to valuation, while maintaining our US$8.30 price target. Cott has now completed their equity offering ... which we believe gives them considerably more financial flexibility going forward.
Cott's businesses in the United States, United Kingdom and Mexico all appear to be improving, he said.