Credit Suisse Taps AmBev as a Rather Refreshing Pick

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of AmBev (NYSE: ABEV  ) climbed 1.5% today after Credit Suisse upgraded the Latin American beverage giant to buy, from neutral.

So what: Along with the upgrade, Credit Suisse planted a price target of $41.70 per share on the stock, representing about 8% worth of upside to its close on Wednesday. While the depressed Latin American consumer space might be providing some decent value opportunities, Credit Suisse thinks it might be prudent to limit the bet to AmBev due to its "best-in-class" fundamentals, attractive valuation, and relatively strong metrics (growth, market power, and risk).

Now what: Credit Suisse expects the valuation gap between AmBev and the overall Brazilian market to steadily close. "We think this relative de-rating is not justified as earnings outlook has hardly changed for Ambev over the last 12M (significant earnings revisions occurred during 1Q13, but recovered thereafter); whereas earnings revisions for [the Brazilian stock exchange] have reached over 40% over the last 12M, as measured by Bloomberg 12M EPS consensus," wrote Credit Suisse in a report. With the stock still off nearly 20% from its 52-week highs, and boasting a dividend yield of 3%, AmBev seems inexpensive on an absolute basis, as well. 

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