Analysts at Argus Research acknowledge that Anheuser Busch Inbev NV (ADR) (NYSE: BUD)'s days of meaningful growth have likely passed but that doesn't mean the stock is not a good addition to an investor's portfolio. The firm's Stephen Biggar and Phil Seligman initiates coverage of AB-InBev's stock rating with a Buy rating and a 12-month price target of $136.
AB-InBev is the world's biggest beer brewer with a 26 percent global market share which is more than double the second place ranked Heineken who boasts a 10 percent market share, the analysts commented in their initiation note. As such, it is always difficult for any global behemoth to show meaningful growth indefinitely but the company's organic revenue growth in the first half of 2017 was impressive and signals that ongoing "modest" acceleration is sustainable.
The beer company should show continued improvements in EBITDA and EBITDA margins, especially as the company looks to tackle under-penetrated markets, especially those in emerging regions, the analysts argued. On top of that, a rise in worldwide demand for premium peers and growth in "near-beer" and nonalcoholic beverages will contribute to the growth story as well.
Over the long-term these factors will result in a mid-single digit revenue profile with "relatively slower" growth in North America and Western Europe but faster growth in emerging markets, the analysts added.
Finally, M&A deals played a vital role in turning AB-InBev to the global giant that it is today so investors shouldn't be surprised to see more deals over time. Also, the stock's 3.4-percent dividend yield merely adds another layer of appeal for investors, especially those who fall in the income-orientated category.
Latest Ratings for BUD
|Sep 2017||Argus||Initiates Coverage On||Buy|
|Mar 2017||Bank of America||Downgrades||Buy||Neutral|
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