Brewing giant Anheuser-Busch InBev (NYSE:BUD) has decided to extend the timeline for its financial assistance program for wholesalers from the end of 2023 to the close of the first quarter of 2024. Initially announced in June 2023, the program was part of the company’s efforts to stabilize sales in the U.S., which came under pressure due to consumer backlash over a marketing campaign.
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Under the financial support plan, AB InBev provides sales incentive payments to wholesalers. The company also reimburses freight/fuel surcharge. Further, AB InBev will continue to offer additional credit to wholesalers until the second quarter of 2024. Moreover, it will introduce a market share recovery incentive plan beginning the second quarter of 2024 to regain the lost ground. This incentive plan will last till the end of 2024.
BUD Backlash
To provide some context, Anheuser-Busch InBev’s Bud Light brand lost its status as America’s best-selling beer following the backlash it encountered, starting in April, due to its partnership with transgender influencer Dylan Mulvaney. In the second quarter, the company’s U.S. revenue fell by 10.5%, reflecting a decline in Bud Light’s sales volume. Additionally, the region’s EBITDA decreased by 28.2% due to market share and productivity losses and higher marketing investments to support wholesaler partners.
It remains to be seen whether the extension of the wholesaler support program will enable the company to regain its lost ground. In the meantime, let’s look at what the Street projects for BUD stock.
What is the Future of Anheuser Busch Stock?
Wall Street analysts are bullish about Anheuser-Busch InBev stock. TD Cowen analyst Vivien Azer initiated coverage on BUD stock with a Buy rating on September 27. The analyst highlighted that BUD’s sales are showing signs of stabilization in the U.S. Moreover, the analyst expects the company’s margins to improve as cost headwinds fade.
In addition, Bank of America Securities analyst Andrea Pistacchi upgraded BUD stock to Buy from Hold on September 29. The analyst expects the company’s margins to improve in the coming quarters as cost pressure is easing.
Overall, with six Buy and one Hold recommendations, BUD stock has a Strong Buy consensus rating. Further, the average BUD stock price target of $69.72 implies 30.9% upside potential from current levels.
