Deutsche Bank is ready to buy Anheuser-Busch stock again, even if customers aren't buying Bud Light. AB InBev's Bud Light sales tumbled over the past two months following its April 1 ad featuring transgender influencer Dylan Mulvaney. And although Bud Light may have lost its crown as the top-selling beer brand in the U.S., the worst of the boycott is over, according to Deutsche Bank.
Anheuser-Busch is primarily listed on the Euronext exchange under the ticker ABI. In the U.S., it trades in American Depositary Receipts (ADRs) under the ticker BUD on the New York Stock Exchange.
Deutsche Bank upgraded Anheuser-Busch's ABI shares to a buy rating from hold early Thursday and raised the price target to 60 euros from 59 euros. The recent stock underperformance "implies a permanent reduction in ABI's U.S. business," analyst Mitch Collett wrote in a research note. "Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business to ever fully recover from its current challenges."
Anheuser-Busch's U.S. business is currently down 12%, driven by a 24% decline in Bud Light sales, Collett wrote citing Nielson data. Sales for the rest of the company's portfolio fell 7%. Still, AB InBev "isn't losing shelf presence," which is a positive indicator if consumer sentiment improves.
Deutsche Bank's survey found that 24% of Bud Light consumers are no longer buying the brand and another 18% have reduced their purchases. Meanwhile, 21% of Bud Light drinkers are buying more, while 37% are maintaining their spending habits. According to the bank's survey, 42% of Bud Light drinkers expect to buy more of the brand again in the next three to six months. About 29% of consumers surveyed said that was unlikely.
Deutsche Bank did not provide a price target of Anheuser-Busch's ADRs.
Bud Light Loses Top Beer Title
The recent boycott caused Bud Light to lose its title as the top beer in the U.S. at the beginning of the month. Lager Modelo Especial overtook Bud Light in U.S. retail dollar sales for the month ending June 3, according to data from Nielsen and Bump Williams Consulting. Anheuser-Busch's market cap dived in May as Bud Light sales tumbled and the boycott persisted.
Modelo made up 8.4% of U.S. grocery, convenience and liquor store sales during the month. Bud Light sales fell to 7.3%, the Wall Street Journal reported Wednesday. Meanwhile, Bud Light U.S. retail sales fell 24% the week ending June 3 compared with the same week last year, while Modelo Especial sales jumped 12%, according to the WSJ.
Bud Light claimed the crown as the top-selling beer in the U.S. in 2001, but sales fell in recent years as Mexican import beers, seltzers, wines and spirits became more popular. Modelo is sold by Constellation Brands in the U.S. But Anheuser-Busch's subsidiary Grupo Modelo owns the international brand license.
Anheuser-Busch sold the brand to Constellation Brands in 2013 to gain regulatory approval for its Grupo Modelo acquisition.
Constellation Brands Earnings
Anheuser-Busch rival and Modelo Especial brand owner Constellation reports its first-quarter results early next Friday. Analysts polled by FactSet expect earnings to rise for the first time in two quarters with a 6.4% jump to $2.83 per share. FactSet guides 4.4% sales growth to $2.47 billion.
Bud Stock, STZ Stock
Anheuser-Busch ADRs rose 2% Thursday following the upgrade. BUD stock tumbled 13.7% over the past two months from its 67.09 peak before the Dylan Mulvaney ad. Shares are down about 3.6% so far this year.
Constellation Brands stock inched 0.4% lower Thursday. STZ shares are trading right below a 248.43 buy point for a saucer-with-handle base. The stock briefly topped that entry last Thursday.
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