HALISTER1: Coca-Cola Femsa Cut to Sell at Citi on Venezuela, Brazil Ops

Coca-Cola Femsa Cut to Sell at Citi on Venezuela, Brazil Ops

(Bloomberg) -- Bank downgrades bottler on lower earnings from “severe profit erosion” in Venezuela, longer than expected CSD slump in Brazil and valuation, analysts including Alexander Robarts write in a report to investors.
  • Historical valuations and comparison to bottling and staples peers in Mexico “appear stretched”
    • While recent Brazil currency/country risk improvements appear priced in, increased scarcity of inputs and production disruptions in Venezuela, and likelihood of a more tepid 2017 CSD recovery in Brazil in 2017 are not
  • KOF currently trades above 11.1x, “which we view as an unjustified premium to its 3-year historical on EV/Ebitda”
  • ADR price target also cut to $73 from $76.50
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
KOFL MM (Coca-Cola Femsa SAB de CV)

People
Alexander Robarts (RWC Partners Ltd)

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