UBS downgrades Anheuser-Busch InBev to sell as drinkers continue to pick spirits over beer
A Covid-19 trend with drinkers flocking to spirits instead of beer continues to put pressure on brewers, which UBS says now is a good time to sell shares of Anheuser-Busch InBev. The company downgraded shares of the drinks company to sell from neutral on Thursday, lowering its price target to €53 from €57. That implies a more than 7% downtrend from current stock trading. “2023 looks set to be another year for Brewers with organic sales growth aligned with price/mix, with downside risks that we believe are not fully assessed,” wrote analyst Nik Oliver. The reopening in China should boost Anheuser’s sales there, but they are widely expected to be less robust than 2020, the release said. “While it surprised on the upside, it may only be partially offset by weakness in the US,” he said. Global Beer Weakness This is partly because consumers have switched to spirits rather than beer, and even a potential recession that hits discretionary spending is unlikely to persuade them to switch again. “Our analysis suggests that the beer category is unlikely to benefit from a slowdown in premium and higher spirits,” Oliver said. “Nevertheless, AB InBev’s value offering (e.g., Busch) can help mitigate the negative impact of downtrading on volume at the expense of product mix.” In addition to the US and China, the company is also suffering from weakness in other markets. In Latin America, and especially in Brazil, there is a risk that disinflation will hit currencies and limit price increases. According to the announcement, this could slow down growth in the region. Overall, UBS expects Anheuser-Busch InBev to struggle to grow in 2023 and 2024, and to face additional currency-switching headwinds over the past year. Deutsche Bank also downgraded shares of Anheuser-Busch InBev from buy to hold on Thursday, saying the company was still in good shape but not “generally fairly valued.” – CNBC’s Michael Bloom contributed to the coverage.
https://www.cnbc.com/2023/01/12/ubs-downgrades-anheuser-busch-inbev-to-sell-as-drinkers-continue-to-pick-spirits-over-beer.html UBS downgrades Anheuser-Busch InBev to sell as drinkers continue to pick spirits over beer
