Two National Guard members shot near White House
Investing.com -- Bernstein downgraded Ambev to Market Perform, saying the stock’s year to date rally has outrun fundamentals and that investor expectations for a December extraordinary dividend have become excessive.
Ambev shares are up 16% this year and 25% from February lows.
Bernstein said the company’s long term profile remains attractive due to its scale in Brazil, improving market share trends and tight cost control, but current sentiment leaves little room for disappointment.
The broker forecasts Brazil beer volumes to fall 3% in the fourth quarter, which it said is about 80 basis points below consensus, after a weak October and a cooler November. It warned that December could also come in soft.
A proposed Brazilian law that would impose a 10% withholding tax on dividends for foreign and some domestic investors from January has fuelled expectations of an extraordinary payout before year end.
Bernstein said these hopes are driving the recent rally but sees two unfavourable scenarios. Either Ambev does not issue a special dividend, which it views as the more likely outcome, or it does so and introduces medium term uncertainty around tax treatment and the company’s broader cash return approach.
Bernstein kept its BRL15.5 price target. It said it still views Ambev’s long term growth opportunity in Brazil and other emerging markets as intact and expects a more attractive entry point once there is clearer visibility on fourth quarter trading, 2026 expectations and the company’s medium term capital return strategy.
For AB InBev, Ambev’s parent, the proposed dividend tax would be a modest negative. Bernstein estimated the impact at about $76m versus AB InBev’s 2024 free cash flow of $11.3bn.