Coca-Cola FEMSA Keeps Its Fizz - Analyst Blog
We are keeping our Buy recommendation on
Coca-Cola FEMSA S.A. de C.V. (
KOF). The company posted slightly lower-than-expected results for the third quarter of 2008 due to losses in derivatives and currency exchange losses, but the results in the Mercosur division were particularly impressive.
We believe that, going forward, new lines of business combined with the recent acquisitions will enhance its top-line growth despite the difficult economic environment throughout the world, including Mexico. Being a producer of an inexpensive, daily-use product, focused on domestic markets, KOF is less exposed to the international credit crisis.
Coca-Cola FEMSA has been reducing debt, a necessary step to reduce financial costs and increase confidence. We think KOF's shares have a considerable upside potential and so we have used a P/E multiple of 10x our 2008 earnings estimate, in line with the market average. Our target price is $38.50.
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iStockAnalyst opinion. Further, the author is not personally advising you
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