27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The bullish case for Anheuser Busch Inbev NV (NYSE:BUD) has come to an end after the beer company reported a strong second quarter report as it signals certain growth metrics may have peaked, according to UBS.
The Analyst
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Nik Oliver downgraded AB InBev's European-listed stock from Buy to Neutral with a price target lifted from 81 euros ($90.73) to 94 euros ($105.29).
The Thesis
AB InBev, the parent company of global beer brands including Budweiser, showed 6.2% organic top-line growth in the second quarter and organic EBITDA growth of 9.4%, Oliver said in the Tuesday downgrade note. (See his track record here.)
Exiting the second-quarter print, there are three reasons to believe EBITDA growth peaked and the company's performance is "as good as it gets for now," the analyst said.
First, the company faces a growing macro headwind in key global markets, including Mexico, he said.
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Second, EBITDA growth during the second quarter was partly due to the realization of SAB cost savings, and the financial benefits will fade, Oliver said.
Third, although not related to the business, shares of AB InBev are up 51% since the start of 2019, and it now trades at a premium to European-listed Staples, the analyst said.
It's also important to note that AB InBev faces a higher degree of foreign exchange risk after selling assets in Australia, he said: the company is now more exposed to currency fluctuations than before if emerging market currencies weaken against the U.S. dollar.
Price Action
Shares of U.S.-listed Ab InBev were trading lower by 0.78% at $97.42 at the time of publication Tuesday.
Related Links:
Why This Massive Anheuser Busch Option Trade May Be A Bearish Hedge
Anheuser-Busch Reports Q2 Earnings Beat
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.