US: Contal and Arca recommendations reduced
Mexican Coca-Cola bottlers Grupo Continental SA (Contal) and Embotelladoras Arca SA have had their share recommendations cut. UBS has blamed the tougher competitive landscape for the cuts.
UBS's Latin American research group lowered Contal to reduce from neutral in a research note published yesterday. The investment bank said that Contal's Q2 earnings were "weaker than expected" at the operating line, underscoring the company's vulnerability to lower-priced brands.
UBS also cut Arca, to neutral from buy, noting Arca's Q2 earnings were also "weaker than expected" at the operating line, with inroads by so-called "B brands" partially offsetting ongoing cost reduction efforts.
"Arca's average pricing is slightly below Contal's, but is still among the highest of the Mexican bottlers we cover, which makes it relatively more vulnerable to price competition," it added in a research note.
Sectors: Soft drinks
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