Shares in drinks group C&C plunged more than 10 per cent yesterday after Merrion Stockbrokers cut its earnings forecasts and ratings for the stock and removed it from its 10-stock model portfolio, citing more seasonality than expected in sales of Magners cider in the UK.

Almost 26 million shares changed hands in Dublin and London combined as the stock had its biggest ever one-day decline. The shares more than doubled last year as the Irish company rolled out its Bulmers cider in the UK under the name Magners. Since their market debut in 2004, the shares have increased more than fivefold.

Yesterday, however, they fell €1.43, to end the day at €13.30 in Dublin. In London, they were down 12.7 per cent, at €13.35.

Liam Boggen, head of equity research at Merrion, said that a survey of a sample of pubs in London and Birmingham had revealed greater seasonality than expected in the sale of Magners, and as a result the brokerage was cutting its earnings per share forecast (EPS) for the company for 2007 by 2.5 per cent and for 2008 by 8.7 per cent. The EPS estimates now stand at 53.9 cent and 69.9 cent respectively. It also cut its rating on the stock from buy to hold and removed it from its 10-stock model portfolio, a fund that significantly outperformed the market last year with a gain of more than 40 per cent.

Merrion's original forecasts were at the top of the consensus range and other analysts and traders were yesterday quick to describe the cuts as a correction of the broker's overzealous forecasting.

Paul Meade, an analyst at NCB, said he wouldn't be changing his forecasts, which have remained the same for the past year at 55.6 cent and 66.5 cent for 2007 and 2008 respectively.

C&C, which attributed its 66 per cent increase in first-half profits to the strong take-up of Magners in the UK, featured among the top stock picks for this year by several equity houses, and was even mentioned in one of Merrion's own analyses, which stated: "We remain bullish about the prospects for C&C in 2007 as the hugely successful Magners rollout continues."

Stan Pearson, head of equities at Standard Life, chose the stock as one of his European picks for this year, and NCB Stockbrokers named it in its top five Irish buys.

Mr Boggen said a significant drop-off in winter market share is also likely to raise concerns that there may be a fad element to Magners consumption in the UK. However, a more accurate picture will be known later today when the next set of AC Nielsen market share data for October and November is released. The most recent data as of yesterday showed a small decline in Magners' share of the long alcoholic drinks market in the UK in September.