E-Malt.com News article: Brazil: Zacks analysts maintain Buy recommendation on AmBev

We are maintaining our Buy recommendation on Companhia de Bebidas das Americas, or AmBev, investment research firm Zacks communicated on May, 11.

AmBev, Latin America’s leading brewer, posted good results for the first quarter of 2009 with excellent results in the key Brazilian market. InBev's acquisition of Anheuser-Busch was positive for the company as it creates huge synergies, Zacks analysts believe.

Despite the difficult economic environment throughout the world due to the global credit crunch, the company, which is focusing on low cost, daily use products, is not tied directly to the international economic cycle. Also, a more relaxed monetary policy in Brazil is very positive for the company.

According to experts, ABV's valuation should be between 20.0x to 21x EPS estimate. Zacks sets a target price of $67.50 according to its detailed DCF [discounted cash flow] model, representing a P/E between 17x and 17.5x Zacks’ 2009 earnings estimates - an acceptable premium over the industry mean, considering the above-average growth and profitability outlook for ABV.


13 May, 2009