On Thursday, Bank of America (BofA) issued a cautionary note on shares of AB InBev SA (NYSE: BUD), highlighting a potential breakdown risk with a downward trajectory into the 40s. The analysis indicates that the stock, which is part of the alcoholic beverages sector, is experiencing a bearish breakdown from a year-long top formation.
The analyst from BofA pointed out that if BUD stays below the 57-58 price range, the bearish trend is likely to persist. The current downside risk is projected to extend to the late 2023 low in the vicinity of $51.60, with further potential declines to a pattern count at $47 and possibly reaching back to the late 2022 low at $44.50.
According to the analyst, the broken uptrend line from late 2022 and the weekly moving averages (MAs) are expected to act as additional resistance for the stock, with a challenging zone identified between $60 to $62. These technical levels are considered significant in determining the future price movement of AB InBev shares.
The technical assessment from BofA suggests that AB InBev’s stock is currently under pressure and facing several resistance levels that could impede upward movement. The analysis is based on the stock's performance and established technical patterns.
In other recent news, Anheuser-Busch InBev (EBR:ABI), the world's largest brewer, reported a mixed third-quarter performance, with notable earnings per share (EPS) of $0.98, surpassing the FactSet consensus of $0.90. Despite this, the company's organic growth for the quarter reached only 2.1%, falling short of TD Cowen's expectation of 3.7%. The shortfall was attributed to weaker performance in key markets like Mexico and China, while the U.S. market showed signs of stabilization.
In response to these financial outcomes, Anheuser-Busch revised its EBITDA forecast, now anticipating a growth range of 6-8%. This adjustment led TD Cowen to revise its price target for the company, reducing it to €60.00. In a show of confidence, Anheuser-Busch also announced a $2 billion share buyback program.
These are the recent developments from Anheuser-Busch, which continues to navigate market challenges with a clear strategy focused on premiumization, efficiency, and shareholder value. Despite current challenges, the company remains optimistic about long-term fundamentals in China and the Middle Americas. This information is based on the company's latest financial results and the analysis of TD Cowen.
InvestingPro Insights
The technical analysis from Bank of America aligns with several key metrics and insights from InvestingPro. AB InBev's stock has indeed been under pressure, as evidenced by its poor performance over the last month, with a total return of -15.16%. This decline has brought the stock to trade near its 52-week low, currently at 80.92% of its 52-week high.
Despite these challenges, InvestingPro data reveals that AB InBev maintains impressive gross profit margins of 54.92% for the last twelve months as of Q3 2024. This strength in profitability is complemented by the company's consistent dividend payments, which it has maintained for 24 consecutive years. The current dividend yield stands at 1.18%.
InvestingPro Tips highlight that AB InBev remains a prominent player in the Beverages industry and is expected to be profitable this year. However, the stock's P/E ratio of 16.89 is considered high relative to its near-term earnings growth, which may contribute to the current bearish sentiment.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for AB InBev, providing a deeper understanding of the company's financial health and market position.
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