It looks like Anheuser-Busch Inbev (NYSE:BUD) is taking few chances with its latest promotional push. After the disastrous repercussions of an ad campaign that featured trans influencer Dylan Mulvaney and caused an uproar that saw sales crater for its flagship Bud Light brand, the world’s largest brewer has now teamed up with a far manlier entity.
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Starting next January, Bud Light will become the official beer of the UFC in the US, in what is set to be the mixed martial arts firm’s biggest-ever sponsorship deal. Anheuser-Busch must hope the pivot to the more macho environs will be the catalyst for renewed favor among beer lovers.
Meanwhile, Evercore analyst Robert Ottenstein thinks sales remain depressed in the US still. “While we estimate Bud Light globally is only M-HSD% of sales, and the firm’s underlying non-U.S. business generally remains strong, U.S. trends remain very weak, and other key brands like Busch Light and Michelob Ultra continue to face headwinds from the controversy,” the analyst said.
Ottenstein’s comments come ahead of BUD’s Q3 results, which will be announced before market action kicks off on Tuesday (October 31st).
For the quarter, Ottenstein thinks Street estimates “appear reasonable overall,” and his EPS forecast of $0.85 for Q3 is the same as consensus. For the full year, it is slightly ahead, sitting at $3.05 compared to the Street’s $3.03 estimate.
On Normalized EBITDA, Ottenstein’s figure stands at $5.08 billion, below consensus at $5.32 billion. Likewise, for FY23, for which the analyst sees organic EBITDA growth of 4.1% to $19.99 billion. This is in line with the low end of BUD’s 4-8% medium term growth outlook, with management suggesting at its September Investor Day that expectations for 2023 hadn’t changed. The Street is calling for 6.1% growth to $20.41 billion, with Ottenstein’s less optimistic take based on a “more cautious view on margins.”
“While ABI has expressed confidence in its momentum outside the U.S.,” Ottenstein summed up, “we are cautious that tougher comps in markets like Brazil and Europe, and a weakening consumer environment across other key markets, may weigh on results.”
All told, Ottenstein maintained an Outperform (i.e., Buy) rating on BUD shares to go along with a $70 price target, implying shares will deliver returns of ~30% a year from now. (Watch Ottenstein’s track record)
All in all, over the past 3 months, 6 other analysts have waded in with BUD reviews and these break down as 5 to 1 in favor of Buys over Holds, all resulting in a Strong Buy consensus rating. The $69.73 average target is roughly the same as Ottenstein’s objective. (See BUD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
