CFRA Research drops its rating on National Beverage Corp. (FIZZ-1.0%) to Sell from Hold following the company's mixed earnings report yesterday.
The firm expects a rough road for National Beverage in the second half of the year.
Analyst Garrett Nelson: "While FIZZ managed to post an in-line quarter despite its first Y/Y revenue decline in six quarters, we think the top line weakness was indicative of more troubling trends in the increasingly competitive flavored sparkling water beverage segment."
Nelson also points to margin pressure as aluminum and other input prices rise on his view that the company could have difficulty passing along higher costs to consumers. He also says short interest on FIZZ has come down enough that the risk of it becoming a meme stock is lower.
CFRA assigns a price target of $40, which is 19.5X the FY23 EPS estimate.