Wells Fargo advised buying shares of beer maker Budweiser. What are their advantages?
Wells Fargo for the first time began analytical coverage of securities of Budweiser beer producer - Anheuser-Busch InBev holding - and immediately advised to buy them, assigning Overweight rating. The target price of the company's receipts traded in the U.S., according to Wells Fargo, is $75 - it implies growth of quotations by 23% relative to the closing level on November 18.
Although the securities are up 22% since the beginning of the year, analyst Chris Carey thinks they are still undervalued: they are trading near decades lows, despite the performance of industry giants and the rate of profit growth of the company itself.
In addition, AB InBev shares are now 15% cheaper than the 2025 maximum, which was reached in June. On November 19 in New York, the company's securities were growing by about 0.5%, while the trades in Brussels ended with a similar growth.
What does Wells Fargo think will impact stock growth?
Carey pointed to upcoming events, such as the World Cup, that could accelerate the company's sales growth.
"While beer maker sales volumes have been under pressure and are likely to decline again on an annualized basis for the third consecutive year through fiscal 2025 (-2.6% in our estimate, the lowest on record excluding 2020), volumes grew at an average 0.5% over the long term (2016-2024) and in the pre-pandemic years (2016-2019)," he wrote.
While currency fluctuations may be a pressure factor for AB InBev, Carey believes the situation looks promising - perhaps for only the second time in nine years. This could set the stage for the best profit growth in six years, he wrote.
Carey added that the gradual margin recovery could be another key element in AB InBev's fundamental story.
"This is not an argument for a rapid margin recovery - we don't expect a sharp return to pre-pandemic levels. But we do anticipate steady progress. In brief, AB InBev has weathered a period of high inflation, raised prices enough to fully offset its impact, and is now starting to see margin improvement as inflationary pressures ease," he said.
What other analysts are saying
On November 19, Jefferies reiterated a "buy" recommendation on Anheuser-Busch InBev shares traded in Brussels and left the target price at €64. This implies a 21.7% upside for the stock.
Of the 25 analysts covering the Budweiser beer maker's securities, 22 advise "buy," while three recommend "hold."
This article was AI-translated and verified by a human editor
