Anheuser-Busch InBev (NYSE:BUD) (ABI) stock moved higher on Monday after the beer maker was upgraded by UBS analysts.
ABI closed 2.9% higher just shy of $61.
The UBS analysts see the stock reaching $77 (€72), from their earlier price target of $68 (€63.50) and upped their rating on the stock to ‘Buy’ from ‘Neutral.’
They believe the beverage company is at an inflection point on growth, margins and cash returns.
“Over the next 12 months, ABI is at the cusp of delivering the ideal consumer staples growth profile, which it has never consistently achieved since pre-2008,” they wrote.
“Fiscal 2024 is the first year in which ABI is able to deliver volume growth, pricing in line with inflation and margin expansion, supporting upside to earnings before interest, taxes deprecation, and amortization (EBITDA) growth.”
Margin upside is seen stemming from operating expenditures (Opex) leverage, with the analysts forecasting plus 200 basis points organic EBITDA margin, leading to a greater than 10% organic EBITDA.
“We see the biggest upside in selling, general and administrative (SG&A) efficiencies, particularly on admin and distribution expenses, where ABI is now amortizing investments made in digital transformation across its emerging markets, as well as rightsizing its North America cost base for the 15% volume rebase,” they wrote.
“The easing commodity cost story is well understood, and accelerating transactional FX tailwinds in the Middle Americas region will kick in more in the second half of 2024 and into the first half of 2025.”