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Deutsche Bank is confident headwinds impacting the beer maker eventually will fade.
Photograph by Drew Angerer/Getty Images
Anheuser-Busch InBev
stock was rising Thursday after shares of the beer maker were upgraded by Deutsche Bank on confidence that the headwinds impacting the business eventually will fade.
Deutsche Bank analyst Mitch Collett upgraded shares of AB InBev (ticker: BUD) to Buy from Hold and increased his price target on the stock to €60 from €59 ($65.92 from $64.83).
“We believe recent underperformance implies a permanent reduction in ABI’s U.S. business. Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges,” Collett wrote in a research note.
Calls to boycott the company started back in April after AB InBev partnered with transgender influencer, Dylan Mulvaney, to advertise Bud Light beers on her social media. Since then, analysts have recognized Bud’s market-share losses, and competitors like Modelo Especial, Coors and Miller Lite have been gaining.
But Collett wrote that recent data gathered by the bank show that 24% of Bud Light consumers no longer buy the brand while another 18% have been buying less. However, that same data also showed that 21% are buying more and 37% are buying the same amount.
“Taken together, our survey data shows that Bud Light as a brand faces significant challenges—particularly with older consumers. However, we believe the forward-looking data sets imply that the challenges will at least partially fade,” Collett wrote. He also added that sales data suggest the company has not lost shelf presence, with sales velocity the main driver of the declines.
Other analysts recently have made similar calls on the company. RBC Capital Markets analyst James Edwardes Jones reiterated his Outperform rating on the stock last week while lowering his price target to €69 from €73.
He argued that the negative sentiment against the company is “excessive given our belief that Bud Light’s travails will not impinge on AB InBev outside the U.S.”
Shares of AB InBev gained 2% in premarket trading Thursday to $57.85. Coming into the session, the stock has fallen 5.5% this year. That’s in stark contrast to other beer stocks.
Molson Coors Beverage
(TAP) has jumped 29% this year while
Constellation Brands
(STZ) has risen 6.3%.
Write to Angela Palumbo at [email protected]
Source: https://www.barrons.com/articles/bud-light-anheuser-busch-stock-upgrade-404f1eb9?siteid=yhoof2&yptr=yahoo