AUS: Foster's Group rating lowered on grim future

By | 12 October 2007

Foster's Group has had its share coverage clipped.

Macquarie Equities has today (12 October) downgraded its rating of the Australian drinks company to 'neutral' from 'buy', warning of potential falling earnings in the future at Foster's.

The company is facing what Macquarie described as headwinds due to the rising Australian dollar hitting export earnings.

The 2008 Australian wine harvest, which is widely forecast to be considerably lower than this year's, will also affect Foster's negatively going forward, the broker said. Higher grape prices will add to cost pressures, although the possibility of rising wine prices could help offset this, according to the broker.

The recent increases in Foster's share price have removed what was previously a clear valuation discount, providing another reason for the recommendation downgrade, Macquarie noted.

Sectors: Beer & cider, Wine

Companies: Foster’s

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