This Firm Just Downgraded Anheuser-Busch To Underperform, But Why?

Shares of Anheuser Busch Inbev SA (ADR)

are down on Tuesday afternoon, after analysts at Tigress Financial Partners downgraded the stock from Neutral to Underperform. In a report issued Tuesday, the firm explains the demotion: while the company continues to lose share in North America (its largest market) to smaller competitors like Boston Beer Co Inc

and FX headwinds are expected to impact on 2015's performance, shares continue to trade at an above-average, stretched valuation. Below, a closer look to the two major problems mentioned above. 1) North American volume continues to decline. In 2014, they fell by 1.3 percent, and "the company estimates that its market share declined 50bps because of competition in Budweiser its flagship brand," the report explains. "BUD is making acquisitions in the faster growing craft and microbrew market, however the addition of these smaller companies cannot make up for losses at Budweiser." The analysts see this trend continuing and "believe it will negatively impact the company's key performance metrics for the foreseeable future." 2) Brazil, the company's second largest geographical segment, looks like a fading positive. While the 2014 FIFA World Cup hosted in the country propelled the company's sales, as it sponsored the event, the analysts don't see this trend continuing over 2015. They explain: "the Brazilian economy is flashing warning signs as declining exports and inflationary pressures merge with middle class discontent with a lackluster economy and increasing distrust of government officials. 30% of BUD's 2014 normalize EBITDAR comes from the Brazilian real and we expect this to be a significant headwind for the company in 2015."