Shares of LaCroix parent National Beverage Corp. closed Tuesday up 5.6% after the stock was upgraded by UBS, but sales of the signature sparkling water have plummeted, and other analysts aren’t nearly as bubbly about the company’s future.

UBS moved National Beverage

FIZZ, +5.60%

  stock up to neutral from sell, but cut its price target to $48 from $50. Analysts said there are “strong category headwinds,” with competition from companies such as Coca-Cola Co.

KO, +0.04%

  and PepsiCo Inc.

PEP, +0.07%

  driving down LaCroix’s market share by about 400 basis points.

Coca-Cola owns Topo Chico, and its Dasani and Smartwater brands include sparkling water products. PepsiCo’s beverage brands include Izze, which mixes fruit juice and sparkling water, and Bubly, an unsweetened sparkling water. PepsiCo also bought previously-public SodaStream in 2018.

And there are other brands in the category, such as Spindrift and Perrier.

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“We believe LaCroix could stabilize trends on incremental brand support in the months ahead,” UBS analyst Sean King wrote.

King said weather is among the factors to blame for the sales decline. A number of apparel retailers have blamed the chilly, wet spring for a decline in sales as well.

Read: Every clothing store stock is down for the past month — Mitch Nolen

“While trends have yet to improve, acceleration in points of distribution ahead of summer months may suggest improving retailer acceptance of LaCroix,” the UBS note said. “This should eventually help stabilize trends ahead of easing second-half compares.”

National Beverage stock has plunged 47.8% over the past year as the Invesco Dynamic Food & Beverage ETF

PBJ, +1.33%

  has risen nearly 1%, and both the S&P 500 index

SPX, +2.14%

  and the Dow Jones Industrial Average

DJIA, +2.06%

  have gained 2%.

A separate May UBS note highlighted the sales decline at LaCroix. A Guggenheim Securities note from May 30 also zeros in on what analysts call the “persistently and increasingly weak retail sales data that now shows the brand effectively in free fall.”

Guggenheim analysts blamed bad press over “natural” claims for the diminished state of the LaCroix brand. There is an ongoing class-action lawsuit that alleges the LaCroix brand actually includes artificial ingredients.

“National Beverage Corp. categorically denies all allegations in a lawsuit filed today without basis in fact or law regarding the natural composition of its LaCroix sparkling waters,” the company wrote in an Oct. 1, 2018, statement. “Natural flavors in LaCroix are derived from the natural essence oils from the named fruit used in each of the flavors.

“All essences contained in LaCroix are certified by our suppliers to be 100% natural.”

LaCroix flavors include pamplemousse, lemon and tangerine.

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Guggenheim analysts think this was the spark that set LaCroix on a downward path but blame other factors, including competition, a lack of innovation and “inexperience managing a rapidly growing brand, made worse by ongoing missteps in public messaging and crisis resolution.”

National Beverage’s other beverage brands include Shasta, Mr. Pure, Ohana, and Rip It, an energy drink.

“As a result, we think it’s unlikely that LaCroix can recover to any meaningful degree while in the hands of National Beverage (or in the absence of a strong distribution partner),” Guggenheim wrote.

Analysts say M&A is the biggest threat to shorting National Beverage stock. While they think Keurig Dr Pepper Inc.

KDP, -0.43%

  “is the only strategic candidate in the U.S.,” Guggenheim doesn’t think management would make the purchase.

“[W]e think LaCroix would be better served in the hands of an owner with strong brand-building capabilities, the financial resources to invest appropriately, and the willingness to do so — with a private-equity buyer seeming most suitable,” analysts wrote.

Guggenheim rates National Beverage stock as sell, with a $36 price target.

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