Grupo Modelo has had its price target upped. Merrill Lynch increased its target for the Mexican brewer yesterday (31 March) in anticipation of cost reduction and efficiency improvement initiatives.

Merrill Lynch raised Modelo's 12-month price objective to MXN40 per share from MXN35.50. On Wednesday (30 March) Modelo's shares closed at MXN32.20.

"Our recent work argues that the degree of efficiency opportunity at Modelo could far exceed our earlier expectations, and could surprise many market observers," Merrill Lynch said yesterday. The brewer could save more than US$300m solely in labour productivity, it added.

"In addition to the divestiture of unproductive assets like company's eight soccer and baseball teams and nine regional stadiums/arenas, we believe labour and operational opportunities to be highly significant," Merrill Lynch said.