Itaú BBA downgraded Coca-Cola FEMSA (NYSE: KOF) to Market Perform from Outperform, citing the stock’s valuation after a strong rally. The firm maintained its price target at $116. Analyst Alejandro Fuchs said Itaú BBA had updated its outlook and estimates following the gains.
The shares have returned 27% year to date and risen 41% over the past year, according to the report. They have also outperformed the Mexican market by 20% this year and rank as the second-best-performing stock in the consumer sector. At $117.05, the stock was trading about 4% below its 52-week high of $122.14.
Itaú BBA retained its year-end 2027 target of MXN 220 per share but said it was prudent to wait before that point because the company could face potential headwinds. The firm expects Coca-Cola FEMSA to distribute excess cash to shareholders in 2027, which could produce a dividend yield of 6% to 7%; that potential payout is not included in its model. The current dividend yield is 3.2%.
The report said Coca-Cola FEMSA trades at a price-to-earnings ratio of 18.9, the highest among regional Coca-Cola bottlers, and has a PEG ratio of 6.8. Fuchs said the risk-reward profile was not compelling at current levels, and the firm would wait for a better entry point before taking a more positive view.
Separately, the company reported record third-quarter 2026 results. Consolidated volume rose 5.3% to 1.1 billion unit cases, while revenue increased 10.9% to MXN 79.7 billion. Gross profit grew 14.5% and adjusted EBITDA rose 16.2%, supported by lower sweetener and PET costs, stronger pricing and a favorable product mix, according to the report.
Sources: Investing.com News.