On Tuesday, Morgan Stanley (NYSE:MS) adjusted its outlook on Anheuser-Busch InBev (NYSE:BUD) shares, lowering the price target to $68.50 from the previous $70.00 while maintaining an Overweight rating.
The revision comes in anticipation of the company's second-quarter results, taking into account the latest scanner data and market insights from the US, Europe, and China, alongside recent foreign exchange rate fluctuations.
The analyst noted that the US market appears to be at a turning point with expectations of volume improvements in the second half of the year. Despite challenges in China, including adverse weather conditions and flooding that impacted the second quarter's price and mix, the trend towards premium products is believed to remain strong in the medium term.
The Latin American market is described as relatively strong, though adjustments have been made to account for the depreciation of the Mexican peso and its anticipated negative influence on the gross margins for the fiscal year 2025.
Furthermore, the firm slightly increased its organic EBITDA growth projection for the fiscal year 2024 from 9.5% to 9.6%. Still, the negative effects of currency headwinds have led to a 2% reduction in the estimated Earnings Before Interest and Taxes (EBIT) and a 4% decrease in projected underlying Earnings Per Share (EPS).
The analysis reflects a mix of changing market conditions across different regions, with a particular focus on the impact of currency exchange rates on the company's financial outlook. The report underscores the dynamic nature of the beverage industry and the factors that can influence a multinational company's performance.
In other recent news, Anheuser-Busch InBev reported a 6.7% increase in net revenue and a 5.4% growth in EBITDA, marking a promising start to 2024. The company's digital initiatives have resulted in $465 million in gross merchandising value of non-API products in the first quarter. Citi, however, revised its price target for Anheuser-Busch due to challenges in the Chinese market, maintaining a neutral rating on the brewer's shares.
Meanwhile, UBS upgraded Anheuser-Busch to 'Buy' from 'Neutral', raising the stock's target to EUR72.00. This change reflects UBS's positive outlook on the company's performance across several key metrics, including volume growth, pricing alignment with inflation, and margin expansion.
Recent developments also include the completion of a $1 billion share buyback program by Anheuser-Busch, with an additional $200 million executed in direct share buybacks. Despite the challenges in the Chinese market, the company remains confident in its long-term market potential. These are the latest updates in Anheuser-Busch's recent financial performance and analyst ratings.
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