On Tuesday, Anheuser-Busch InBev's stock (NYSE:BUD) was downgraded by TD Cowen from Buy to Hold, with a new price target of $68.00. The firm cited a balanced risk-reward outlook up to the year 2025 as the reason for the change in rating.
"While we continue to view ABI as well-positioned in emerging markets longer term, we expect demand pressure in China and in the U.S. to continue to limit the near-term upside," said analysts at the firm.
Despite the downgrade, the possibility of share repurchases by ABI was highlighted as a positive factor. Nevertheless, the details regarding the timing and scale of such repurchases by ABI remain uncertain.
In other recent news, Anheuser-Busch InBev reported strong second-quarter results for 2024, with a 55% increase in gross merchandising value of non-ABI products, reaching $530 million. The company's EBITDA rose by 10.2%, with margin expansion across all regions, and underlying EPS increased by 25%. Revenue also saw a notable growth of 2.7%, with a 3.6% rise in revenue per hectoliter.
Citi recently upgraded Anheuser-Busch InBev's stock from Neutral to Buy, setting a new price target at €69.00. The financial institution predicts that the company will outperform its full-year 2024 organic EBITDA growth guidance, largely due to strong cost control measures within the U.S. operations. Citi also anticipates a potential announcement of a $1 billion buyback program alongside the company's third-quarter results.
Morgan Stanley maintained a positive outlook on Anheuser-Busch InBev, adjusting the stock's price target to $73.50 and keeping an Overweight rating on the shares. Despite lowering its forecast for the company's organic sales growth for the fiscal year 2024 to 3.7%, Morgan Stanley still expects the company to outperform its own guidance for organic EBITDA growth.
InvestingPro Insights
To provide additional context to TD Cowen's analysis, let's examine some key financial metrics and insights from InvestingPro. Anheuser-Busch InBev (NYSE:BUD) currently boasts a market capitalization of $126.74 billion, reflecting its significant presence in the global beverage industry. The company's P/E ratio stands at 21.88, suggesting that investors are willing to pay a premium for its earnings potential.
InvestingPro Tips highlight BUD's impressive gross profit margins, which is evident in the data showing a gross profit margin of 54.48% for the last twelve months as of Q2 2024. This robust margin underscores the company's pricing power and operational efficiency, factors that could help mitigate some of the demand challenges mentioned by TD Cowen.
Additionally, BUD has maintained dividend payments for 24 consecutive years, demonstrating a commitment to shareholder returns that aligns with the potential for share repurchases noted in the article. The current dividend yield is 1.0%, with a dividend growth of 7.02% over the last twelve months.
While TD Cowen has expressed concerns about near-term growth, it's worth noting that BUD's revenue for the last twelve months as of Q2 2024 was $59.93 billion, with a modest growth of 1.41%. This slow but positive growth may support the balanced risk-reward outlook mentioned by the analysts.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights, with 7 more tips available for Anheuser-Busch InBev on the platform.
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