Baltika has been upgraded. Brunswick UBS yesterday upped the Russian brewer to "buy" from "neutral" in anticipation of a stronger rouble and lower inflation going forward in 2004.

Brunswick also raised the price target for Baltika to US$14.5 per share from $12.5.

In a note, Brunswick analyst Dmitry Vinogradov said the brewer looked undervalued compared to its biggest rival, Sun Interbrew. Vinogradov believes that Baltika could regain lost market share this year.

Vinogradov said that the company's stock could rise if it staged a turnaround similar to Sun Interbrew's last year, if it looked to claw back market share lost as it focused on factory expansion and failed to introduce popular plastic bottles in time to pre-empt competitors.

"We believe that accelerating sales volume growth and recapturing of lost market share, stable margins, and potentially higher dividends - we expect Baltika to increasingly generate operating cashflow ahead of its investment needs - are likely catalysts for the stock's outperformance," said Vinogradov.

Baltika yesterday announced a rise in sales for 2003 to 16.17m hectolitres from 16.06m hectolitres in 2002.