Ambev S.A. (NYSE:ABEV) is one of the best affordable stocks under $5 to buy for the next 3 years. Ambev S.A. (NYSE:ABEV) was downgraded to Market Perform from Outperform by Bernstein on November 26, who assigned a $2.88 price target to the stock.
The firm supported the rating downgrade with the company’s valuation, stating that the shares rose 16% year-to-date. While Bernstein continues to like the company’s long-term fundamentals, it told investors that it believes the current expectations to now be “overblown”, and thus recommends that investors take profits and wait for a more attractive entry point.
Ambev S.A. also received a rating update from Goldman Sachs analyst Thiago Bortoluci on November 11, who maintained a Sell rating on the stock and set a $1.95 price target.
The rating updates came after Ambev S.A. released its fiscal Q3 results on October 30, with net revenue (organic) for the quarter rising 1.2% compared to last year. Management stated that top-line performance was driven by a 7.4% net revenue per hectoliter growth.
Gross margin also expanded by 10 bps to 51.5% and normalized EBITDA margin expanded by 50 bps to 33.9%, supported by cost management and effective revenue. However, high cash taxes led to cash flow from operating activities dropping by 14.7% compared to R$8.108 billion in fiscal Q3 2024.
The company also reported that normalized EBITDA also rose by 2.9%, with all its business units delivering growing or flat EBITDA. Normalized EBITDA margin expanded by 50 bps to 33.9%, attributed to effective revenue and costs management by the company.
Ambev S.A. produces, distributes, and sells beverages. Its offerings include carbonated soft drinks, beer, and other non-alcoholic and non-carbonated products. The company’s operations are divided into the following geographical segments: Brazil, Central America and the Caribbean (CAC), and Canada.
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This article is originally published at Insider Monkey.
