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UK: Lehman resumes SABMiller share coverage

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SABMiller has seen a second broker up its coverage of the brewer's shares. Lehman Brothers today (14 October) raised its rating of the company to 'equal-weight' from 'underweight,' after Panmure shifted its stance on Wednesday to 'buy' from 'hold.'

Lehman has resumed its coverage of SABMiller after suspending coverage at the time of the company's announcement of the Bavaria acquisition in July. At the time, the US broker had placed an 'underweight' recommendation on the shares.

Lehman stressed that the Bavaria deal has given the company a top two position in world beer, as well as ensuring its likely place at the "end game".

The broker added that it still sees resilience in SABMiller's predominantly emerging market exposure, which represents over 75% of group EBIT, despite investor concerns over the US business.

"The Bavaria deal does add value to our Discounted Free Cashflow target price; however, as a well-managed company, we see less restructuring benefit to margin here than elsewhere in European beer," the broker concluded.

It has set a 1,020 pence price target on the brewer's shares.


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