Anheuser Busch InBev is set to announce its second-quarter results on Thursday, with investors’ attention primarily focused on its performance in the U.S. market. Although only a quarter of the company’s business comes from the U.S., recent developments related to Bud Light have significantly impacted their sales.
AB InBev’s American depositary receipts (ticker: BUD) have experienced a 16% decrease since April due to a sharp decline in Bud Light sales. Formerly the leading beer brand in America, Bud Light’s sales have suffered after a marketing partnership with transgender influencer Dylan Mulvaney and subsequent handling by management.
This decline in Bud Light’s sales has not only benefited its competitors but has also raised concerns among analysts. In fact, estimates for the second-quarter earnings per share have been revised down by 12.5% over the past three months, according to FactSet. The consensus now predicts that AB InBev will earn 68 cents per share on $15.38 billion in revenue.
In May, the company reported better-than-expected first-quarter results and addressed the controversial issue during its conference call.
Despite the negative attention surrounding Bud Light, optimists argue that AB InBev’s international business accounts for nearly three-quarters of its overall operations, making this particular issue irrelevant in many markets. Additionally, it is believed that the worst of Bud Light’s sales decline is over, and any permanent damage will likely be minimal.
The majority of analysts covering AB InBev maintain a positive outlook, with over 60% of them issuing a Buy rating or equivalent recommendation for the stock. According to data from FactSet, these analysts also have an average price target of $67.32, indicating a potential upside of around 20% from current levels.
Considering the global strength of AB InBev’s brands, some experts suggest that the recent stock selloff presents a buying opportunity.
