E-Malt.com News article: Mexico: FEMSA downgraded to neutral by HSBC

HSBC downgraded its recommendation on shares of Mexican brewer FEMSA to neutral from overweight, citing valuation after a positive third-quarter, Dow Jones communicated on November, 5.

In a research note earlier this week, HSBC said FEMSA had better-than-expected third-quarter earnings.

HSBC said FEMSA's domestic beer sales volume growth, while below that of rival brewer Grupo Modelo, was "a credible growth rate, in our view, due to the weak consumer environment in Mexico."

HSBC kept its neutral rating on Modelo shares, and raised its target price to 64 pesos ($4.82) from MXN55.

"Although we expect some market recovery to occur in Mexico, the consumer environment is likely to remain soft and both companies will be faced with a higher excise tax on beer in their home market," HSBC said.



06 November, 2009