Anheuser Busch Analyst Says Share Price Has Gone Too Flat, M&A Unlikely

Despite Anheuser Busch InBev NV BUD performing broadly in-line with expectations in 2018, its share price has declined by around 42 percent, lagging the MSCI Emerging Markets Index by 24 points and the SPX by 35 points, according to Susquehanna.

The Analyst

Analyst Pablo Zuanic maintains a Positive rating on Anheuser Busch InBev and reduced the price target from $90 to $84.

The Thesis

The beer stock has limited catalysts, Zuanic said in a Monday note.

Given the decline in share price and low leverage, Anheuser Busch InBev does not have the flexibility for M&A deals in the medium-term, the analyst said. 

The company’s ability to set prices in emerging markets could be limited by the impact of a slowdown in China, Zuanic said. Anheuser Busch InBev’s U.S. business is unlikely to be a catalyst, he said. 

This may not be the right time to split the company into one that focuses on developed markets and one targeting emerging markets, the analyst said, adding that AmBev is unlikely to issue stock to buy out Anheuser Busch InBev’s shareholders.

“Improving sentiment on Brazil, faster-than-expected deleverage and more aggressive revenue and cost synergy realization may help the stock in the year ahead." 

Price Action

Anheuser Busch InBev were trading up slightly at $69.15 at the time of publication. 

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An Anheuser Busch Clydesdale at Busch Gardens. Photo by Leadgold/Wikimedia.