Alcoholic beverage giant Anheuser-Busch InBev (BUD), or AB InBev, scored a rating upgrade from Argus with a price target of $70. Argus analyst Taylor Conrad attributed the upgrade to strong sales and several other positives. BUD stock has rallied 24% so far this year, mainly driven by the company’s upbeat fourth-quarter results.
AB InBev owns popular brands like Budweiser, Corona, and Stella Artois. The company reported better-than-expected results for the fourth quarter despite a 1.9% decline in overall volumes due to weak demand in China and Argentina. Alcoholic beverage makers have been under pressure due to changing consumer habits, with a shift to lower alcohol consumption.
Argus Is Bullish on AB InBev Stock’s Prospects
Conrad noted AB InBev’s strong Q4 2024 results and stated that management signaled confidence by announcing a 22% dividend hike. The analyst also noted the company’s cost reduction initiatives to enhance margins and earnings growth.
The 4-star analyst is optimistic about AB InBev’s ability to leverage its megabrands, which accounted for 57% of its top line in 2024. The company’s mega brands are the top brands in each market that make up the majority of its volume. During the Q4 conference call, management highlighted that the megabrands have boosted the top line and have grown from $25 billion in 2021 to about $33 billion.
Further, Conrad stated that the company’s recent sales growth has been driven by higher and more targeted pricing, expansion into new product categories, and its “premiumization” strategy.
Is BUD Stock a Good Buy?
Given its improved financials, Wall Street has a Strong Buy consensus rating on Anheuser-Busch InBev stock based on four Buys and one Hold recommendation. The average BUD stock price target of $69.60 implies 12% upside potential.
