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On Friday, Bernstein SocGen Group adjusted its financial outlook on Becle SAB de CV (CUERVO:MM) (OTC: BCCLF), reducing the price target from Peso39.00 to Peso37.00, yet maintaining an Outperform rating on the stock. The revision comes as potential US tariffs on Mexican imports loom over the company, which could significantly impact its profits. According to InvestingPro data, Becle maintains impressive gross profit margins of 53.48% and operates with a moderate level of debt, suggesting financial resilience despite market challenges.
Becle, known for its tequila, generates roughly 33% of its net sales from this product in the US market. With current annual revenue of $2.11 billion and EBITDA of $426.9 million, the company’s management has indicated that if the US were to impose tariffs, there could be an $80 million hit to profits before any mitigating actions. This represents a roughly 20% decrease in group operating income, which is a slightly more favorable outcome than the 25% initially estimated by analysts. InvestingPro analysis reveals that despite recent challenges, including a significant 60.81% stock price decline over the past year, the company maintains strong fundamentals with a healthy current ratio of 2.64.
The lesser impact is partly due to the ability to ship 51% agave as a liquid from Mexico and bottle it in the US. Additionally, Becle may see a short-term benefit from having increased inventory in the US in anticipation of the tariffs. Despite the potential for tariffs, Bernstein SocGen remains positive about Becle’s valuation and prospects, although it recognizes that the uncertainty will continue to weigh on the stock until there is more clarity on the situation. For deeper insights into Becle’s valuation metrics and 10+ additional exclusive ProTips, access the comprehensive Pro Research Report available on InvestingPro.
The firm has also taken a conservative stance on Becle’s constant currency net sales growth for fiscal year 2025, positioning it at the lower end of the company’s guided mid-single-digit percentage range. This forecast takes into account strong growth in regions outside the US, which is anticipated to be partially offset by weaker US performance in the first half of the year due to inventory normalization.
An additional optimistic detail for Becle is the lower-than-expected effective tax rate guidance, now at around 26%. However, due to the revised outlook and the potential impact of tariffs, Bernstein SocGen has trimmed its fiscal year 2026 earnings per share (EPS) estimate by approximately 3%, leading to the new price target of Peso37.00.
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