Anheuser-Busch InBev (NYSE:BUD)'s recent underperformance implies a permanent reduction in its US business, according to analysts at Deutsche Bank.
Still, their proprietary survey data suggests these headwinds are likely to fade even if they do not expect the US business ever to fully recover from its current challenges, the analysts wrote in a client note.
They also upgraded their rating on the brewer to ‘Buy’ from ‘Hold’, with an increased price target of €60 from €59 previously.
The analysts have revised their estimates for AB-InBev’s full-year 2023 earnings to reflect the headwinds the company faces and now expect 1.6% growth in organic EBITDA (underlying earnings). They expect the company to also reduce — or remove — its 2023 EBITDA guidance when it releases second-quarter earnings on August 3.
“Nielsen data suggests ABI's US business is currently -12% with Bud Light -24% and the remainder of the portfolio -7%,” the analysts wrote.
“However, analysis of distribution data suggests ABI is not losing shelf presence with sales velocity the primary driver of decline. This bodes well if consumer sentiment improves.”
Contact the author at stephen.gunnion@proactiveinvestors.com