Ahead of its Finals in March, AG Barr looks a good situation after yesterday’s Trading Update helps to put even more fizz into its shares, now 622p with analyst TP’s up to 810p

29.01.2025

The big question for shareholders of the IRN-BRU maker AG Barr (LON:BAG) could well be – when are the fizzy drinks group’s shares likely to break above the 672p share price achieved last September? 

Last night they closed at 621.91p, up 6.67% on the day, after a gain of 38.91p following the publishing of the group’s Trading Update for the full year ended Saturday 25th January this year. 

The Business 

A.G. Barr, which is commonly known as Barr's, is a Scottish soft drink and energy drink manufacturer based in Cumbernauld, North Lanarkshire, Scotland and is widely known for manufacturing the drink IRN-BRU. 

The company, which can trace its history back to 1875, manufactures, distributes, and sells a range of beverages. 

It operates through three segments: Soft drinks, Cocktail solutions and Other.  

The Soft drinks segment comprises two business units: Barr Soft Drinks and Boost Drinks. Barr Soft Drinks includes various brands such as IRN-BRU, Bundaberg, OMJ!, Rubicon, Simply Fruity, Rubicon RAW, Sun Exoti, and Tizer.  

Its Boost Drinks portfolio includes energy, sport, iced coffee, protein and including the franchise brand, Rio.  

The Cocktail solutions segment consists of pre-mixed cocktails, syrups, mixers and purees.  

The Other segment represents its MOMA business unit, comprising oat milk drinks and other oat-based products.ts products include Cream Soda, Passion Fruit Martini Nitro Can, Citric Syrup, Mojito Mixer and others. 

Yesterday’s Trading Update 

The multi-beverage business with a portfolio of market-leading UK brands including IRN-BRU, Rubicon, Boost and FUNKIN, stated that its revenue in 2024/25 is expected to be some £420m (£400m), which would represent around a 5% year-on-year growth. 

For its full year the group’s Management expects that its adjusted operating margin will show a strong improvement to about 13.5% (12.3%), which will have helped to drive its double-digit profit growth. 

Management Comment 

CEO Euan Sutherland stated that: 

"A.G. BARR is in line to deliver another year of strong top line growth, margin improvement and cash generation.   

These headline metrics highlight excellent progress towards our long-term financial goals.   

We have sustained brand momentum despite the well-trailed wider market pressures and continue to make good progress towards our margin target. 

We are committed to consistent long-term revenue growth and have confidence in further margin improvement as per our previous guidance.   

Our expectations for 2025/26 are unchanged and in line with market expectations." 

Broker’s Views 

There are eight analysts following the company, all with Buy Ratings on its shares. 

Their average Target Price is 724p, with 810p being the highest and 522p being the lowest call. 

Analysts Darren Shirley and Clive Black, at Shore Capital Markets, considers that the group’s shares have been underperforming the market by some 5%. 

Looking for a three-year compound annual growth rate of 14%, the broker remains of the strong view that its multiples undervalue a high-quality, well-invested branded UK business, with a strong long-term return. 

Their estimates for 2024/5 are for £400.0m (£318.0m) revenues, with adjusted pre-tax profits of £50.5m (£43.5m), lifting its earnings to 33.6p (29.4p) and its dividend to 15.1p (13.1p) per share. 

For the year just underway they see £420.0m sales, £58.0m profits, 609p earnings and paying a 17.5p per share dividend. 

For the 2026 year, they look for £440.0m turnover, £65.0m profits, 43.6p earnings and a healthy 19.5p dividend. 

My View 

With its Finals for the 2024/2025 period due to be announced on Tuesday 25th March, I feel that there is still plenty of time to jump aboard this stock, especially if you buy on any dips on profit-taking after the recent run-up in price. 

Barrs is a highly cash generative business, with estimates that the £700m capitalised group will have ended its trading year with more than £60m of net cash (£53.6m). 

Under Euan Sutherland, its Management has an ambitious value-driven strategy, looking to take advantage of its growth opportunities. 

Is there still time – to get bizzy with the fizzy? Yes! 

(Profile 31.07.20 @ 444.5p set a Target Price of 525p*)