AB InBev price target raised to $73, named a Top Pick at Morgan Stanley

Morgan Stanley analyst Sarah Simon raised the firm’s price target on AB InBev to $73 from $68.50 and keeps an Overweight rating on the shares, which is now the firm’s new Top Pick in European Beverages. Over the past about five years, AB InBev and its two listed subsidiaries have de-rated significantly due to various macro and idiosyncratic issues, such as leverage concerns in Europe, fiercer competition and cost headwinds as well as higher taxes in Brazil, and slower macro in China, the analyst tells investors. However, the firm’s work gives it “conviction that the market is excessively penalizing” multiples for AB InBev (BUD) and Ambev (ABEV), says the analyst, who arrives at “an out-of-consensus conclusion that a theoretical P/E re-rating for the three stocks is warranted.”