Anheuser-Busch InBev (NYSE:BUD), a prominent player in the Beverages industry, received an upgrade from Bank of America on Friday, as the bank improved its rating of the company's shares to 'buy' from 'neutral'. This comes as the company's impressive gross profit margins, which stand at 54.21% according to InvestingPro data, have been catching the eye of investors. Alongside this, the bank also increased its price target for Anheuser-Busch InBev to $68, up from the previous target of $65, well above the current price of $53.56.
This upgrade comes as pressures on cost of goods sold have started to ease for Anheuser-Busch InBev. The stock now reflects a more than $1 billion hit from Bud Light and a higher cost of doing business. Despite revenue growth slowing down recently, as noted in InvestingPro Tips, the company's revenue still stands at a robust $59.09 billion, according to InvestingPro data.
The company has been transforming its business in many of its key markets over the past few years, particularly in Latin America. A more effective portfolio strategy has been implemented, along with increased innovation and a digitized route-to-market with BEES (B2B). This transformation is seen by analysts as a clear competitive advantage. In fact, the company's high earnings quality, with free cash flow exceeding net income, has been highlighted in InvestingPro Tips, making it an attractive investment option.
Analysts led by Andrea Pistacchi noted that it's "hard not to be negative" about the U.S. volume outlook for Anheuser-Busch InBev. The company's stock generally trades with low price volatility according to InvestingPro Tips, and the recent dip in price, with a 1 month total return of -7.53%, could present a buying opportunity. Despite this, the overall view of the company appears optimistic, as reflected in the upgraded rating and increased price target. The company has also consistently increased earnings per share and maintained dividend payments for 23 consecutive years, adding to its appeal for investors looking for steady returns.
For more insights like these, check out InvestingPro Tips, which offers an additional 10 tips for Anheuser-Busch InBev, among other companies.
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