Barclays analyst Laurence Whyatt downgraded Ambev to Underweight from Equal Weight with a price target of $3.50, down from $5.00. The analyst sees "several challenges" for Ambev, particularly in its core Beer Brazil business that he believes are likely to get worse before they can get better. A combination of limited pricing power, aggressive competition, weaker currency, higher input costs and limited volume growth make the case for further margin contraction and hence lower free cash flow generation, Whyatt tells investors in a research note. Additionally, the analyst sees limited potential for Ambev to maintain EBIT margins well above peers.