Budweiser parent company Anheuser-Busch InBev (NYSE:BUD) (AB InBev) could be set up for another year of “robust” organic growth as China reopens, according to Citi.
“Some investors remain nervous about the weakening beer demand in the US,” analysts noted.
“We think this is overdone and expectations for US volumes are lowly set.”
READ: Cheers me Beers: Heineken gets cheeky broker upgrade though AB InBev and Carlsberg preferred
Citi is estimating full-year 2023 US volumes to drop by around 3% when the beverage company reports its 4Q 2022 earnings on March 2.
Consensus estimates peg 4Q earnings per share at around $0.70, with revenue coming in at $15.4 billion on average.
Looking ahead, the combination of China reopening and OXXO-supported Mexican growth set the group up for another robust year of organic growth, Citi noted.
“With management likely to guide for +4% to +8% EBITDA growth in full-year 2023 and net debt/EBITDA reaching 3.0x by year-end, previous stock-market concerns about the group’s ability to deliver consistent growth and financial deleverage have largely been laid to rest,” analysts wrote in a note.
“Admittedly, higher pension accretion expenses may limit earnings upgrades, while the H2 22 PE re-rating is likely to limit the scale of outperformance.”
Citi added that the risk-reward “remains positive” for the time being.
“However, with Altria stock overhang concerns decreasing and given ABInBev’s exposure to the still resilient EM (emerging markets) and lower COGS (cost of goods sold) headwinds than peers, we believe the risk/reward remains positive for now,” analysts wrote.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas