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Coca-Cola FEMSA shares fall after downgrade

A UBS analyst on Monday downgraded soft-drink bottler Coca-Cola FEMSA to "Sell" from "Neutral" on the risk of rising sweetener costs, a possible soda tax in Mexico and potential currency headwinds.
/ Source: The Associated Press

A UBS analyst on Monday downgraded soft-drink bottler Coca-Cola FEMSA to "Sell" from "Neutral" on the risk of rising sweetener costs, a possible soda tax in Mexico and potential currency headwinds.

Shares fell $2.37, or 5.1 percent, to $44.49 in afternoon trading.

Analyst Tomas Lajous said the shares are trading near their all-time high, and that its valuation is relatively expensive. Still, Lajous raised his price target to 63 pesos ($46.13) per share from 55 pesos ($40.28).

"We are concerned that Mexico could levy excise taxes on soft drinks and bottled water following the fiscal miscellany linked to the 2010 budget," Lajous told investors in a research report. "The negative effect of this could be further compounded by rising sweetener costs."