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In a report published Thursday, analysts at JP Morgan upgraded
Fomento Economico Mexicano SABFMX from Neutral to Overweight. The price target has been raised from $101 to $106. Strong execution helped the company attract a stronger customer base in Mexico, driving better stock valuation as well as potential upside.
JP Morgan expects Oxxo sales to accelerate in 2015, driven by the company's initiatives, a better economy and attractive PEG. "We expect Oxxo's same-store sales to surpass inflation again in 2015 post the economic slowdown and excise tax hike hit on revenues in 2014," the analysts said.
Successful execution of initiatives is also expected to drive a recovery in the ocmpany's drugstores and gas stations.
The lockup period for Fomento's share holding in
Heineken N.V.HEIA expired recently. "It's hard to imagine that FMX management has not been planning ahead for this $8.7bn amount; we see good reasons for such," the analysts stated.
JP Morgan expects any development in the context of this share holding to prove to be a potential catalyst for Fomento's shares.
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