Lehman Brothers has initiated coverage of C&C Group.

The broker said today (23 August) that it has giventhe Irish company an 'underweight' recommendation and EUR5.10 (US$6.90) price target, a 9% downside potential, on valuation grounds.

Lehman Brothers said that, despite the 50% correction in C&C Group's share price over the past two months, it considers the market too optimistic on cider momentum in the UK.

The price target reflects its view that UK cider could continue to increase market share against other alcoholic drinks categories, said the broker.

Earlier this month, C&C, which owns the Magners cider brand, issued a second profit warning for this year. The company blamed the poor weather conditions and increased competition in the UK for a deterioration in cider sales volumes in the country during the second half of July. Manufacturing and marketing costs were also highlighted as being "substantially higher".