Deutsche Bank Downgrades Compania Cervecerias Unidas (CCU) to Hold
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Deutsche Bank downgrades Compania Cervecerias Unidas (NYSE: CCU) from Buy to Hold. Price target lowered from $40.50 to $31.50.
Deutsche analyst says, "We are lowering our 2009 expectations for CCU on the back of important revisions to our economists' GDP forecasts and recent increases in sovereign spreads, with a substantially lower price target ($31.50/ADS, from $40.50 previously). Based on this change, we no longer see an attractive risk-reward in the stock and as a result downgrade to Hold (from Buy). 1Q09 volumes are due out on April 7, and because 1Q08 comparisons are the most difficult this year, could lead some investors to overreact (so we prefer to stay on the sidelines and buy on significant weakness)...DB now forecasts a GDP decline of 0.4% in Chile in 2009 and growth of 1.9% in 2010 (versus our previous assumptions of 2.4% and 3.0% respectively). Despite our slightly stronger FX forecast, the net effect on margins should be ~25-30 bps."
Compania Cervecerias Unidas SA (CCU) is a diversified beverage company operating in Chile and Argentina. It has licensing agreements with Heineken Brouwerijen BV, Anheuser-Busch Incorporated, PepsiCo Inc, Paulaner Brauerei AG, Schweppes Holdings Limited, Guinness Brewing Worldwide Limited, Watt’s Alimentos SA and Nestle SA.
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