JP Morgan is out defending Hansen Natural (NASDAQ:HANS) following weaker than expected quarterly results out last night:
Firm notes they remain Overweight here for a couple key reasons:
While Q1 EPS was a big disappointment, they do expect results to improve in the remainder of the year, as Hansen shipments start to more closely match underlying strength in retail sales based on Nielsen scanner data, and margin pressure dissipates. Second, based on after hours trading and their new EPS forecast, Hansen is trading at 15.7 times 2008E EPS, which the firm views as too low given retail sales momentum, and they believe is unfairly towards the lower end of Hansen’s lower growth beverage peers. They view valuation as particularly attractive given acquisition potential with recent industry consolidation of small, high-growth beverage companies, as well as Hansen’s strong balance sheet with $3.26 per share in net cash/investments and a share repurchase program in place comprising 7% of shares.
Notablecalls: We may see a bounce in HANS today.
PS: Note that Goldman Sachs is throwing in the towel downgrading their rating to Neutral from Buy this morning.
Firm notes they remain Overweight here for a couple key reasons:
While Q1 EPS was a big disappointment, they do expect results to improve in the remainder of the year, as Hansen shipments start to more closely match underlying strength in retail sales based on Nielsen scanner data, and margin pressure dissipates. Second, based on after hours trading and their new EPS forecast, Hansen is trading at 15.7 times 2008E EPS, which the firm views as too low given retail sales momentum, and they believe is unfairly towards the lower end of Hansen’s lower growth beverage peers. They view valuation as particularly attractive given acquisition potential with recent industry consolidation of small, high-growth beverage companies, as well as Hansen’s strong balance sheet with $3.26 per share in net cash/investments and a share repurchase program in place comprising 7% of shares.
Notablecalls: We may see a bounce in HANS today.
PS: Note that Goldman Sachs is throwing in the towel downgrading their rating to Neutral from Buy this morning.
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