On Wednesday, Bernstein analysts adjusted their outlook on Anheuser-Busch InBev (EBR:ABI) shares (NYSE:BUD) shares, decreasing the price target from $78.00 to $73.00 but maintaining an Outperform rating.
The revision reflects expectations that the company will achieve the higher end of its 2004 guidance, projecting a 6% to 8% organic EBITDA growth. Despite a decline in stock value during the fourth quarter, partly attributed to less-than-expected third-quarter results, Bernstein views the current valuation of Anheuser-Busch InBev as appealing.
The analysts anticipate a rebound in profit margins, particularly in the United States, as support measures for wholesalers expire and additional gains are expected from a brewing contract with Pabst. The forecast includes a stable cost environment with exceptions in the second half of the year in Mexico and Brazil, and continued efficiency improvements.
Moreover, they project an ongoing reduction in underlying leverage, approximately 0.3 to 0.4 times, although this is subject to fluctuations in foreign exchange rates and the company's involvement in any potential placement by Altria (NYSE:MO).
The updated analysis takes into account the negative impact of a strong U.S. dollar and adjusted assumptions, leading to a reduction in expected earnings per share by 1.7% for 2024 and 4.0% for 2025. As a result of these revisions, Bernstein has set a new price target for Anheuser-Busch InBev, which is listed on the New York Stock Exchange as an American Depository Receipt (ADR), at $73.00.
The report by Bernstein concludes with a maintained Outperform rating on Anheuser-Busch InBev stock, signaling confidence in the company's potential for above-average returns despite the adjusted price target. The analysis by Stirling and his team provides investors with updated projections and considerations for the beverage giant's financial outlook in the coming years.
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