Key risks that could impede share price from achieving our target price include: 1) Ambev’s bottom line is commodity-exposed, and, although it hedges for the coming 12 months, higher-than-anticipated increases in aluminum, wheat, sugar or resin prices could negatively impact our earnings forecasts. 2) Also, we keep an eye out for the Brazil beer competitive landscape as we see capacity additions from other players potentially impacting Ambev’s market share.
If the impact on the company from any of these factors differs from our base case expectations, the stock could have difficulty achieving our target price or could increase more than we expect.
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