UBS has begun coverage of Irish drinks company C&C Group.

The investment bank initiated coverage of the company today (11 October) with a 'buy' rating and a target share price of EUR14. UBS highlighted the doubling of C&C's rating since its IPO in May 2004 to 19 times earnings from 10 times. Despite this, the broker said that it still believes this undervalues the growth potential of C&C's flagship cider brand, Magners.

UBS also said that the initial success of the brand in the UK, tied to the continuing recovery of the UK cider market and the strong operational leverage of cider production, should help generate a compound annual growth rate of around 39 times for earnings per share between this year and 2009.