MEXICO CITY — GBM Research has introduced a 2020 price target of 40 pesos ($2.09), along with a relative “Market Performer” rating, to Grupo Bimbo S.A.B. de C.V.

“Lower restructuring expenses coupled with operating efficiencies have yielded important S.G.&A. (selling, general and administrative) reductions and profitability improvements over the last quarters,” GBM noted in a Dec. 9 research report. “Moreover, while valuations have become more attractive, there are still some loose ends that are not clear to us and that will require close monitoring, such as the turnaround process in Latin America and consistent capacity to increase prices in Mexico. In addition, while the discourse seems to be changing, capital allocation decisions toward large M.&A. targets remain a risk.”

GBM said it expects a tougher scenario for top-line performance at Mexico City-based Grupo Bimbo following weaker-than-expected volumes during 2019. The research firm also said it anticipates a lower capital expenditures estimate for 2019 at 13,535 million pesos, down from an earlier estimate of 16,273 million pesos.

GBM did note several signs of profitability improvement at Grupo Bimbo, specifically in North America and Europe-Asia-Africa. The gains have come from initiatives that target a “leaner and more efficient” operation, GBM said.

Grupo Bimbo’s status as a leader in its main categories around the world also was pointed to as a strength by GBM.

“With one of the largest fleets in America and 202 facilities with state-of-the-art technology, serving more than 3.1 million points of sale, Bimbo has managed to become a market leader in its main categories within its territories,” GBM said. “All this provides the company with a competitive advantage and entry barriers, particularly in Mexico.”