On Friday, BofA Securities adjusted its outlook on Anheuser-Busch InBev (ABI:BB) (NYSE: BUD), reducing the price target to EUR68.00 from the previous EUR70.00, while still recommending a Buy rating for the stock. The revision comes amid expectations of a sluggish start to the year for the global brewer, with a forecast of a 2.4% rise in organic sales, which includes a slight decrease in volume by 0.9% and a price/mix improvement of 3.4%.
The analyst anticipates organic EBITDA to increase by 2.0% to $4,748 million, despite a significant 23% EBITDA reduction in the U.S. market. This decline is expected to ease starting from the second quarter. The performance in the Asia-Pacific (APAC) region is also predicted to be subdued in terms of volume.
Excluding the U.S. figures, the forecast suggests an increase in volume by 0.9% and an 11% jump in organic EBITDA, supported by lower cost of goods sold (COGS) pressures and favorable pricing that should aid margin growth across various regions.
The report also projects growth in volumes in several markets, with the Middle-Americas seeing a 3.2% increase, South America 1.1%, and Europe, the Middle East, and Africa (EMEA) 1.4%. However, the expected earnings per share (EPS) is $0.61, indicating a 5% year-over-year decrease, influenced by a currency headwind of approximately $300 million on EBIT, primarily due to the Argentinian Peso and Naira.
The analyst suggests that the company's management is likely to maintain its organic EBITDA growth guidance of 4-8%, which has been adjusted to exclude hyperinflation pricing in Argentina. This guidance is considered conservative by the analyst. Moreover, no new share buyback initiatives are anticipated at this time.
InvestingPro Insights
As Anheuser-Busch InBev navigates a challenging start to the year, real-time data from InvestingPro provides a snapshot of the company's financial health. With a market capitalization of $118.67 billion and a P/E ratio that stands at 21.19 based on the last twelve months as of Q4 2023, BUD shows signs of stability in the market. The gross profit margin is particularly impressive at 53.86%, underscoring the company's ability to maintain profitability despite market fluctuations.
InvestingPro Tips highlight Anheuser-Busch InBev's status as a prominent player in the Beverages industry and its consistent dividend payments for 24 consecutive years, which may be of interest to long-term investors. Additionally, analysts predict the company will be profitable this year, a sentiment supported by the company's positive performance over the last twelve months. These insights, coupled with 5 additional tips available on InvestingPro, could help investors make more informed decisions.
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