An Inflection Point In Anheuser Busch Inbev Is 'Imminent'

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CLSA reiterated its Outperform rating on
Anheuser Busch Inbev SA (ADR)BUD
and retained the 12-month price objective of $145.00.

Analysts, led by Caroline Levy, see an imminent inflection point, indicating the shift in rapidly-growing high-end brands.

They are confident that the move would help fuel 5–6 percent organic growth in revenue and 13–15 percent underlying EPS upside growth between the years 2016 and 2018. The lead analyst thinks the company stands to gain $2.4 billion synergies due to SAB.

Anheuser Busch continues to face headwinds from the United States as mainstream beer is losing its share to imports and craft offerings. Incidentally, the company receives 80 percent of its volume from mainstream beer.

Related Link: Top 10 Domestic Beer Brands By Sales

The brokerage sees the company gaining in portfolio transformation with strong growth for its Stella Artois and Michelob Ultra.

"With volume declines in mainstream beer moderating, we estimate the portfolio mix shift into the faster-growing categories will cause overall volume to bottom out in 2016, provided ABI holds share in the mainstream category. If mainstream beer declines -0.5 percent pa going forward, we estimate volume should be flat in 2016 and accelerate to +1 percent by 2020," said CLSA.

At time of writing, Anheuser Busch was down 0.25 percent on Friday, trading at $126.48.

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Posted In: Analyst ColorLong IdeasPrice TargetReiterationAnalyst RatingsTrading IdeasGeneralCaroline LevyCLSAMichelob Ultrastella artois
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