Written By
Sheikh Hasib Ahmed
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Anheuser-Busch InBev, the parent company of Bud Light, had its shares rise as much as 4% on Friday after Bank of America changed its rating on the stock from Neutral to Buy.
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The impact of the Bud Light boycott repercussions, input cost pressures, and its investments in Latin America are already factored into the stock price, according to analysts there, therefore they predict increased profit growth.
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"Anheuser-Busch As cost of goods sold (COGS) pressures have begun to lessen and [the more than] $1 billion profit impact from Bud Light is in the base and a higher cost of doing business, we believe InBev's margins are at a turning point.
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The impact of the Bud Light boycott repercussions, input cost pressures, and its investments in Latin America are already factored into the stock price, according to analysts there, therefore they predict increased profit growth.
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In spite of a difficult year for the business, AB InBev shares has attempted to rebound. While shares of its rivals Molson Coors (TAP) and Constellation Brands (STZ) are up 23% and 8%, respectively, year to date, AB InBev stock is down 7.7%.
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The beer giant's margins have been falling since 2018, but BofA anticipates a 300-basis-point rise over the next three years.
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With its exposure to Latin America (which should be quite resilient) and rising earnings per share, ABI offers pretty strong earnings visibility in the current environment, according to a top-down viewpoint.
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Backed by pricing power, a decline in the cost of commodities, and a reduction in debt," Pistacchi added. The experts do not anticipate margins reaching levels seen in 2019.
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In its most recent quarterly results, the company reported earnings per share that were marginally higher than projected, coming in at $0.72 as opposed to $0.71.
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According to forecasts from Bloomberg, earnings per share for the third quarter are predicted to be $0.89. On October 31, AB InBev will release its profits.