STOCKS NEWS EUROPE-SABMiller higher; Caz raises estimates

Shares in SABMilller (SAB.L) gain 0.5 percent, bucking a weak blue chip trend .FTSE as investor risk appetite wanes and the brewer's defensive attractions come to the fore, helped too by positive comments from Cazenove.

The broker repeats its "outperform" rating on SABMiller and marginally upgrades its EPS forecasts for the firm to reflect currency changes.

Its 2010 estimate is raised to 147.8 cents, from 146.2 cents previously, its 2011 estimate rises to 172.2 cents, up from 166.7 cents, and its 2012 forecast is upped to 188.4 cents from 182.6 cents.

Cazenove says SABMiller appears fairly valued on its forecasts at 14.3 times 2010 estimated price/earnings, however, factoring in the full scope for gross margin recovery would boost the brewer's earnings by around 15 percent and would move SABMiller to a significant discount over a period of 2-3 years.

"Given our belief in the margin recapture story we therefore continue to see SABM as good value. However, we believe that the market will need to see evidence of this before further significantly re-rating the stock. We only expect this to come through in fiscal H2, i.e. the first half of calendar 2010," Cazenove says.

Reuters Messaging rm://jon.hopkins.reuters.com@reuters.net