- Morgan Stanley (NYSE:MS) dives into the Latin America food and beverage sector. In general, the firm expects improved pricing power to lift margins, although market expectations are seen as too high in Brazil.
- The MS team says it prefers food names exposed to Mexico or the U.S. "We also tend to favor names that are less exposed to big changes in commodities/FX," reads the analyst note. "On the other hand, we would avoid names that are trading well above historical multiples that have a strong recovery of Brazil baked into current estimates," warns the firm.
- Morgan Stanley's individual picks are listed below.
- Fomento Economico Mexicano (FMX, OTCPK:FMXUF) is rated at Overweight. Price target potential +21%.
- Gruma (OTC:GMKYY, OTC:GPAGF, OTC:GMKKY) is rated at Overweight. Price target potential +12%.
- Bimbo (OTCPK:GRBMF, OTCPK:BMBOY) is rated at Equalweight. Price target potential -1%.
- Arca Continental (OTCPK:EMBVF, OTCPK:EMBVY) is rated at Equalweight. Price target potential +3%.
- Ambev (NYSE:ABEV) is rated at Equalweight. Price target potential -5%.
- Coca-Cola FEMSA (NYSE:KOF) is rated at Underweight. Price target potential -4%.
- Embotelladora Andina (AKO.A, AKO.B) is rated at Undeweight. Price target potential -12%.
- Grupo Lala (OTCPK:GRPBF, OTC:GLSDF) is rated at Underweight. Price target potential -1%.
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