Morgan Stanley Updates Estimates For Fomento Economico Mexicano SAB (ADR)

In a report published Thursday, Morgan Stanley analyst Lore Serra reiterated an Equal-Weight rating on Fomento Economico Mexicano SAB (ADR) (NYSE: FMX).

In the report, Morgan Stanley noted, “Our KOF EBITDA estimate increases by 1% in 2014 but 5% in 2015. The main drivers of the increase are higher margin assumptions and higher top line growth in South America. The higher top line growth is driven by Venezuela, which we estimate has had local currency revenue growth of ~100% in 1H14, accounting for 75-80% of organic (and currency-neutral) revenue growth. Our 2014/15 margin assumption increases by 40 bps, as weaker margins in Brazil are offset by stronger margins in other countries. Despite the higher EBITDA, our net income estimate declines by 8% in 2014 and grows only ~1% in 2015, as we build in higher non-cash charges, higher financial/monetary expenses, and a higher tax rate.”

Fomento Economico Mexicano SAB (ADR) closed on Wednesday at $98.42.