Still lagging from the the COVID-19 pandemic, Brazil and its alcoholic beverage market are slowly coming back. This is good news for AmBev SA (ABEV), Brazil’s largest brewing company, which has recently seen improving forecasts and indicators. (See ABEV stock charts on TipRanks)
Detailing these developments is Robert Ottenstein of Evercore ISI, who wrote that although the COVID-19 situation in Brazil is still impacting society, the country’s economy and business conditions are improving. He wrote that vaccination rates and AmBev’s technological advancements were driving a positive outlook for the company.
Ottenstein reiterated a Buy rating on the stock, and declared a price target of $5, reflecting a possible 12-month upside of 41.64%.
The optimistic analyst expects that by Q4, around 70% of the country will be vaccinated, and as such, restrictions on recreational social industries like bars and restaurants will be eased. Brazil’s recreational social businesses are currently confined to operating at 70% capacity and must close by 9 p.m.
Ottenstein also mentioned AmBev’s new Zé delivery platform, which has seen “explosive growth,” and has fostered an environment of high engagement among consumers. About 50% of the delivery service’s customers are recurring, and the company has plans to expand to more cities.
In regard to other strong brands in the Brazilian market, the three-star analyst wrote that Heineken is “working on a third price increase in 9 months,” and is seeing high sales volumes despite COVID-19 related constraints.
In regard to other South American markets, Ottenstein reported that Argentina is “doing well” and seeing improved outlooks, and that sales in the Caribbean should continue to climb as U.S. tourism picks up.
On TipRanks, ABEV has an analyst rating consensus of Moderate Buy, based on 1 Buy rating and 2 Hold ratings. The average AmBev price target is $4.20, suggesting a potential 12-month upside of 18.98%. The stock closed Monday at a share price of $3.53.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
