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On Tuesday, Evercore ISI sustained its positive stance on Anheuser-Busch InBev (NYSE:BUD) shares, maintaining an Outperform rating and a $75.00 price target. The beverage giant, with a market capitalization of $95.5 billion and an impressive gross profit margin of 55%, currently trades near its 52-week low of $45.94.
According to InvestingPro data, analysts' price targets range from $55 to $90, suggesting potential upside. The research firm observed a notable improvement in U.S. beer volumes, which increased approximately 325 basis points sequentially in the last four weeks (L4W), changing from a decline of 5.1% year-over-year (YoY) in the previous L4W to a smaller decline of 1.9%. The two-year and three-year trends also showed sequential gains, though more modestly, improving around 145 basis points and 215 basis points, respectively.
In the recent four-week period, total U.S. beer volumes decreased by 1.9%, which was roughly consistent with the 1.8% decline in the fourth quarter of 2024 and the 2.1% decline in the third quarter of 2024. Anheuser-Busch InBev and Molson Coors Beverage Company (NYSE:TAP) both increased their market share in the last two weeks (L2W), with Anheuser-Busch also gaining ground relative to Molson Coors.
The report highlighted the performance of the Michelob Ultra brand, particularly in the last two weeks, likely bolstered by the national launch of Michelob Ultra Zero. Additional insights on Anheuser-Busch InBev are expected to be provided by the company's sell-side roundtable before the fourth-quarter results on February 26. Evercore ISI also suggests that the financial year 2025 consensus for the company's performance might be overly optimistic.
InvestingPro analysis indicates the stock is currently undervalued, with strong free cash flow yield and 24 consecutive years of dividend payments. Discover more insights and 10+ additional ProTips with an InvestingPro subscription, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks.
In other recent news, Anheuser-Busch InBev reported notable earnings per share of $0.98 in the third quarter, surpassing the FactSet consensus of $0.90, and announced a $2 billion share buyback program. Despite this, the company's organic growth for the quarter reached only 2.1%, falling short of expectations. As a result, Anheuser-Busch adjusted its EBITDA forecast to a growth range of 6-8%.
In response to these developments, several analyst firms have revised their outlooks. JPMorgan reiterated its Overweight rating and expressed confidence in the company's potential for top-line recovery and cash return upside. However, Bernstein, TD Cowen, and Bank of America issued cautionary notes, with Bernstein decreasing the price target from $78.00 to $73.00, TD Cowen reducing it to €60.00, and Bank of America highlighting a potential downside risk.
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