Goldman Sachs Downgrades Coca Cola Femsa (KOF) to Neutral

Goldman Sachs downgraded Coca Cola Femsa (NYSE: KOF) from Buy to Neutral.

Analyst Luca Cipiccia said, "Our Buy call on KOF was primarily driven by the view that investors had overestimated the potential negative impact to volumes of the new taxes (and consequent price increases) on sugary drinks in Mexico. 1Q results proved supportive to our thesis, with organic volumes in Mexico only declining 4% (vs. 6%-7% target for the year), helped by market share gains, strong performance of returnable packages, and favorable product mix. As all the players had to increase prices at the same time, KOF benefited from its competitive advantages, strong commercial model, and swift adjustments to the new environment, including cost and production line reductions. We believe, however, that expectations have now adjusted for better performance in Mexico, limiting the potential for further positive surprises and estimate upgrades."

For an analyst ratings summary and ratings history on Coca Cola Femsa click here. For more ratings news on Coca Cola Femsa click here.

Shares of Coca Cola Femsa closed at $115.50 yesterday.

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