Goldman Sachs: Heineken's performance indicates intense competition in the Brazilian market Ambev (ABEV.US) stock price may fall by more than 18%

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Heineken announced its results for the first quarter of fiscal year 2025 on April 16. According to the data, the company's sales volume and sales in the Brazilian market both showed a mid-single digit year-on-year decline due to the impact of last year's high base. However, the company's management estimates that it has grown its share in this market from a “sales” perspective. Management specifically pointed out the strong performance of the mainstream product line, with Amstel brand sales increasing slightly year over year.

Although Heineken's sales performance in Brazil is generally in line with market expectations, Goldman Sachs believes that the year-on-year flat pricing result is a negative surprise, which once again reinforces the bank's view that the competitive environment is more intense and that some consumers are switching to lower-priced brands.

Therefore, in anticipation that the competitive environment will be more intense, Goldman Sachs reiterated its “sell” rating for Brazilian beer giant Ambev (ABEV.US). The target price is $1.90, which has more than 18% room to drop from the closing price of $2.33 on April 16. The bank said that although it believes that Heineken's performance will not change the market's expectations for Ambev's sales performance in Brazil, there is a certain downside risk in terms of pricing. Ambev plans to release financial results on May 8.

According to data, Ambev is the largest beer brewer in Latin America and the Caribbean, and is also a subsidiary of Budweiser InBev in the region. The company produces, distributes and sells beer and PepsiCo products in Brazil and other Latin American countries, and owns Quinsa, Argentina's largest beer brewer.

However, Goldman Sachs added that the main upward risks faced by Ambev's stock price include: higher dividend rate; faster and stronger recovery of Ambev's Skol brand in the Brazilian market than expected; stronger exchange rate and lower costs; maintaining market share and achieving sales growth and actual price increases in the Brazilian market; improvements in macroeconomic conditions in Argentina; and continuation of some preferential tax policies in Brazil.