02 May, 2007

Europe: Carlsberg upgraded to 'hold', InBev to 'buy'

Shares in Carlsberg AS have been upgraded to 'hold' from 'sell' and InBev to 'buy' from 'hold' by ING in a note on the European brewing sector, in which the broker said it thinks cost savings are underestimated and merger benefits overestimated, dealers said, according to AFX News, April 27.

In a research note, ING said the potential for cost savings has made it more positive on the beer sector.

It said the five big European brewers should be able to generate 1.5 bln eur gross savings, and that Heineken -- its top sector pick with a 'buy' recommendation -- has the biggest scope for cost savings.

The broker also said its model suggests only two merger scenarios would make sense: Carlsberg and Scottish & Newcastle PLC or InBev and Anheuser-Busch Inc.

However, ING said it thinks Scottish & Newcastle shares are overvalued and thus retained its 'sell' rating. The broker has a target price of 525.7 pence on the UK stock, a 633.8 dkr price target on Danish group Carslberg, 63.8 eur on Belgian firm InBev, and a 47.5 eur target on Dutch brewer Heineken.

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