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Investing.com - Bernstein downgraded Ambev S.A. (NYSE:ABEV) from Outperform to Market Perform on Wednesday, setting a price target of $2.88. The target represents a modest 15% upside from the current price of $2.51, though InvestingPro data indicates Ambev is undervalued based on its Fair Value assessment.
The downgrade comes as Ambev’s share price has risen 16% year-to-date and 35% for its U.S. listing, with shares up 25% from February lows. InvestingPro data shows an even stronger YTD return of 39.57%, with the stock now trading near its 52-week high of $2.63.
Bernstein believes investor expectations for the Brazilian beverage company have become "overblown" and recommends that shareholders "take profits" while looking toward a more attractive future entry point. The stock currently trades at a P/E ratio of 13.37, with a market capitalization of $39.78 billion.
Despite the rating cut, Bernstein maintains a positive view on Ambev’s long-term fundamentals, citing its emerging markets exposure to beer, improving market share trends, and solid cost control capabilities. This aligns with Ambev’s "GREAT" financial health rating from InvestingPro, supported by strong revenue growth of 9.79% and an impressive gross profit margin of 51.77%.
The research firm specifically highlighted Ambev’s market leadership in Brazil, noting the country still has "more room for beer volume growth and premiumization" over the medium term, while also praising the company’s "impressive cost control in 2025 despite external shocks to industry volumes." Ambev offers a 3.66% dividend yield and maintains a strong 17% return on equity. For deeper insights into Ambev’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
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