Bank of America Upgrades Anheuser-Busch InBev to Buy, Increases Price Target

Anheuser-Busch InBev, a major player in the beverages sector, received a favorable upgrade from Bank of America on Friday, which raised its rating on the company’s shares from ‘neutral’ to ‘buy.’ This upgrade is underpinned by the company’s strong gross profit margins, currently at 54.21%, which have garnered investor interest. Additionally, Bank of America increased its price target for Anheuser-Busch InBev to $68, up from $65, significantly higher than the current trading price of $53.56.

This positive shift in outlook comes as pressures on the company’s cost of goods sold have begun to ease. The stock has absorbed more than $1 billion in losses due to Bud Light and heightened operational costs. Despite a recent slowdown in revenue growth, the company’s earnings remain impressive at around $59.09 billion.

In recent years, Anheuser-Busch InBev has been actively transforming its business in key markets, especially in Latin America. The implementation of a more effective portfolio strategy, along with increased innovation and a digitized route-to-market approach, has positioned the company favorably against competitors. Analysts have noted the company’s high earnings quality, characterized by free cash flow that surpasses net income, making it an appealing investment choice.

Analysts led by Andrea Pistacchi acknowledged the challenging outlook for U.S. volume sales, suggesting that it’s “hard not to be negative” in this regard. The company’s stock typically exhibits low price volatility, and the recent price decline—reflecting a total return of -7.53% over the past month—may present a potential buying opportunity. Nonetheless, the company’s overall outlook appears positive as indicated by the upgraded rating and increased price target. Additionally, Anheuser-Busch InBev has consistently increased its earnings per share and has maintained dividend payments for 23 consecutive years, further enhancing its attractiveness to investors seeking reliable returns.

This recap highlights key insights about Anheuser-Busch InBev’s market position and investment potential, showcasing the company’s strategic transformations and financial stability.