{"id":22571,"date":"2023-06-14T12:59:14","date_gmt":"2023-06-14T16:59:14","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/bud-lights-problems-arent-going-global-that-makes-ab-inbev-a-buy\/"},"modified":"2023-06-14T12:59:16","modified_gmt":"2023-06-14T16:59:16","slug":"bud-lights-problems-arent-going-global-that-makes-ab-inbev-a-buy","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=22571","title":{"rendered":"Bud Light’s Problems Aren’t Going Global. That Makes AB InBev a Buy."},"content":{"rendered":"
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\n Anheuser-Busch InBev
\n has lost its title as seller of America\u2019s favorite beer, but that isn\u2019t stopping yet another analyst from arguing that the stock is worth a tipple after its selloff.<\/p>\n

Bud Light was AB InBev\u2019s top brand until a boycott pulled the beer from its No. 1 spot. Since early April, many conservatives have stopped buying the beer to protest its partnership with transgender social media personality Dylan Mulvaney. Management\u2019s responses only fueled the controversy. <\/p>\n

\n

Declines in sales volume for Bud Light as well as other AB InBEV (ticker: BUD) brands have some investors worried that the company might\u00a0have to cut prices.\u00a0<\/p>\n

Yet plenty of analysts\u2014and Barron\u2019s<\/em>\u2014have argued that AB InBev\u2019s stock has dropped too far, given the company\u2019s diverse portfolio and global reach.<\/p>\n

On Wednesday, RBC Capital Markets analyst James Edwardes Jones joined the chorus. He reiterated an Outperform rating, although he lowered his price target to \u20ac69 from \u20ac73.<\/p>\n

\u201cThe Bud Light controversy has been calamitous from several perspectives in our opinion, not least for the share price,\u201d he wrote. <\/p>\n

Jones estimated the boycott will hurt Bud Light\u2019s earnings before interest, taxes, depreciation, and amortization by 37% this year, and the company\u2019s North American Ebitda by 22%.<\/p>\n

While that sounds worrisome, but Jones argued that the bearish case for AB InBev is \u201cexcessive given our belief that Bud Light\u2019s travails will not impinge on AB InBev outside the US.\u201d<\/p>\n

The U.S. accounted for about a quarter of AB InBev sales in the most recent year, according to data from
\n FactSet.<\/span>\n <\/p>\n

America\u2019s drinkers, of course, are still important for AB InBev, but Jones\u2019 estimates include what he called a \u201cworst case scenario\u201d\u2014the boycott is long-lived, as others believe it will be\u2014leading to a durable 15% decline in North American volumes.<\/p>\n

And while the analyst noted that sum-of-the-parts valuations have their weaknesses, in this case it demonstrates how limited the Bud Light issue is\u2014and how the shares still look undervalued at their current level.<\/p>\n

Jones\u2019 lowered forecasts still imply 4.5% organic Ebitda growth this year and 4.7% next year for the company as a whole, but estimate that \u201cthe valuation multiple being accorded to the North American business has declined by more than 20%.\u201d<\/p>\n

\u201cIf there was a danger of contagion from the US spreading to other countries we would understand, but we don\u2019t think there is.\u201d he wrote. \u201cLikewise, if the Bud Light debacle was impacting morale and performance across the rest of AB InBev it would make sense, as it would if we expected to see declines on these declines in future years. We hope not.\u201d<\/p>\n

In midday trading Wednesday, AB InBev was up 2.3% to $56.92. The shares have had a small bounce this week, but are still off more than 7% this year. \u00a0<\/p>\n

Jones acknowledged that the opportunity is a nerve-racking one, but if investors need some liquid courage, well, there\u2019s always Bud Light.<\/p>\n

Write to Teresa Rivas at teresa.rivas@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Anheuser-Busch InBev has lost its title as seller of America\u2019s favorite beer, but that isn\u2019t stopping yet another analyst from arguing that the stock is worth a tipple after its selloff. Bud Light was AB InBev\u2019s top brand until a boycott pulled the beer from its No. 1 spot. Since early April, many conservatives have […]<\/p>\n","protected":false},"author":1,"featured_media":22572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-22571","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nBud Light's Problems Aren't Going Global. 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