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Blended fruit drinks, iced coffee, specialty teas, sports drinks, flavoured water, and perhaps the biggest new trend in the beverage industry, energy drinks - competition for carbonated soft drinks continues to bubble.

As a result of the ongoing weakness in the U.S. soft drink industry, National Bank Financial analyst David Newman estimates Cott Corp. (NYSE:COT) will see a 6.5% year-over-year decline in volumes when the company reports fourth quarter results for 2006 on Friday.

He has lowered his target price on Cott shares to US$13 from US$14.50, while also reducing his recommendation to “underperform” from “sector perform.”

Mr. Newman estimates Cott will lose 1¢ per share, versus a consensus estimate of a 2¢ loss, but said he would not be surprised if the results are even weaker.

“Cott is more levered than branded bottlers to the competitive and slowly declining U.S. carbonated soft drink market,” he said in a research note, adding that he still expects international volume growth.

COT 1-yr chart