BUDFF - Anheuser Busch 'compellingly undervalued' amid Bud Light backlash - RBC
2023-06-14 08:33:04 ET
RBC Capital Markets sees a buying opportunity for AB InBev ( BUD ) even as backlash against the Bud Light brand rages on.
Shares of the Belgian brewery giant have languished since April, dropping by over 15% since a controversial social media post featuring a transgender influencer and a specialized Bud Light can was published.
While AB InBev ( BUD ) CEO Michel Doukeris has said that “ misinformation and confusion ” played a part in sparking the social media backlash against the Bud Light brand, emphasizing that the can was not made for production or sale to the general public, nor was it an official ad campaign, the consumer backlash has proven durable. In fact, recent reports indicate Bud Light is no longer the top selling beer in the US due to the severity of the boycott.
Nonetheless, RBC Capital Markets analysts James Edwardes Jones and Emma Letheren see a “nerve-racking” buying opportunity. In short, while the controversy and ensuing volume declines have no doubt been “ calamitous from several perspectives ,” the analysts believe the share price decline appears overdone.
“We think the Bud Light debacle is a one off and will not affect AB InBev’s business outside the US. Consequently we believe that the 23% derating, in addition to hefty forecast downgrades, is excessive,” the team concluded. “While our price target has fallen by 5% to €69, we nonetheless believe that AB InBev’s shares are compellingly undervalued and reiterate our Outperform rating.”
Shares of Anheuser Busch ( BUD ) rose 1.11% in premarket trading on Wednesday.
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Anheuser Busch 'compellingly undervalued’ amid Bud Light backlash - RBC