Goldman Sachs Group, Inc.: Heineken's beer performance forecast indicates intense competition in the Brazilian market. Ambev (ABEV.US) stock price may fall by over 18%.

Goldman Sachs Group, Inc. released a research report stating that on April 16th, Ambev announced its first quarter performance for the fiscal year 2025. The data shows that the company experienced a mid-single-digit decline in sales volume and revenue in the Brazilian market compared to the same period last year, due to the impact of a high base from the previous year. However, the company's management estimated that from a "sold out" perspective, they achieved market share growth in this market. The management specifically highlighted the strong performance of their mainstream product line, with a slight increase in sales volume for the Amstel brand year-on-year. Although Ambev's sales performance in Brazil roughly met market expectations, Goldman Sachs Group, Inc. believes that the pricing remaining flat year-on-year is a negative surprise, reinforcing the bank's view that the competitive environment is becoming more intense, with some consumers shifting towards lower-priced brands. Therefore, due to the expected more intense competitive environment, Goldman Sachs Group, Inc. reiterated a "sell" rating on the Brazilian beer giant Ambev (ABEV.US), with a target price of $1.90, representing over an 18% downside from the closing price of $2.33 on April 16th. The bank stated that while they do not believe Ambev's performance will change market expectations for its sales performance in Brazil, there is some downside risk in terms of pricing. Ambev is planning to announce its financial results on May 8th. According to data, Ambev is the largest beer brewer in Latin America and the Caribbean, and is a subsidiary of Anheuser-Busch InBev SA/NV Sponsored ADR in the region. The company produces, distributes, and sells beer and PepsiCo, Inc. products in Brazil and other Latin American countries, and owns Quinsa, the largest beer brewer in Argentina. However, Goldman Sachs Group, Inc. added that the main upside risks facing Ambev's stock price include: a higher dividend payout ratio; a faster and stronger recovery of Ambev's Skol brand in the Brazilian market than expected; a stronger currency and cost reductions; maintaining market share and increasing sales volume in the Brazilian market leading to actual price increases; improvement in the macroeconomic situation in Argentina; and the continuation of certain tax incentives in Brazil.