Margins at Bud Light’s parent company,
Anheuser-Busch InBev,
are set to improve, according to BofA Securities.
Analyst Andrea Pistacchi upgraded shares of
Anheuser-Busch
to Buy from Neutral, raising her target for the stock price to €65 ($68.93) from €50.80. That implies a 29% increase from the company’s American depositary receipts’ (ticker: BUD) closing price on Thursday.
“ABI’s margins are at an inflection point, in our view, as cost of goods sold (COGS)
pressures have started to ease, >$1bn profit hit from Bud Light is in the base and a higher cost of doing business, which has weighed on margins in recent years, is now largely in the base too,” Pistacchi wrote in a research note Friday.
Pistacchi’s change to a bullish stance comes after the stock has declined 11% in 2023. Many consumers have boycotted Bud Light because the brand had a marketing partnership with a transgender social-media influencer.
The damage was evident in Anheuser Busch’s second-quarter financial results, released in August. Revenue in the U.S. declined 10.5% as the company sold less Bud Light, though the second-quarter profit was better than expected as a result of positive performances in other countries.
Pistacchi said the company is “in a good position to leverage its strong market positions, particularly in Latin America, into better profit growth going forward.”
“Against an uncertain global economic and consumer backdrop, we like ABI’s
exposure to LatAm (almost 60% of group EBTDA), where economists are expecting only a slight slowdown in private consumption,” she wrote, while noting that it is difficult not to be pessimistic about the outlook for U.S. sales volume.
Shares of Anheuser Busch were up 3.6% to $55.48, and were on pace for their largest percentage increase since November 2022, according to Dow Jones Market Data. The stock has declined 7.6% this year.
Write to Angela Palumbo at [email protected]
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