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Aug 30, 2023

Fundamentals suggest it's as good an opportunity as ever to buy shares of Anheuser-Busch, Bernstein analysts said Tuesday, even as the beer stock crashes as its Bud Light brand gets caught in the culture war zeitgeist.

It's been a lonely few months for Bud Light.

It's currently "an attractive entry point" for prospective Anheuser-Busch investors, wrote Bernstein's Nadine Sarwat and Trevor Stirling, setting a $71.60 price target for the stock.

That’d be a 30% increase from Anheuser-Busch's roughly $55 share price Tuesday, reversing the stock's 18% decline over the last two months as Bud Light sales plummeted amidst controversy about the brand's marketing partnership with transgender influencer Dylan Mulvaney.

Bernstein's confidence in Anheuser-Busch comes even as it factors in a "permanent 15% haircut" to Bud Light sales, in turn lowering its 2023 profit forecasts for the overall company by 6.7%.

The bank instead cited the stock's enticing fundamentals, explaining Anheuser-Busch's segment exclusive of its Asian and Brazilian subsidiaries is trading at a near all-time low price relative to projected earnings, with a forward price/earnings multiple of 8.

Overall, Anheuser-Busch is trading at a 14.8 P/E multiple, its lowest in more than a decade (excluding a pandemic-driven 2020 blip) and far below the S&P 500's 24.7 average—suggesting the stock is trading at cheap prices relative to its performance and peers.

In a Tuesday note to clients, Bank of America upgraded its rating for Anheuser-Busch's chief competitor, Molson Coors, from "sell" to "neutral," primarily citing the precipitous decline in Bud Light sales. Shares of Molson Coors are up more than 25% since the beginning of April.

Mulvaney posted a video to her TikTok account on April 1, showing off custom Bud Light cans bearing her likeness, sent to her by the company in recognition of the anniversary of her coming out. Sales of the beer subsequently declined about 20% year-over-year as a wave of mostly conservative consumers took issue with the Mulvaney partnership, even as Anheuser-Busch categorized the backlash as misguided. Anheuser-Busch has lost almost $25 billion in market value since Mulvaney posted the infamous TikTok.

6.7 million. That's how many fewer cases of Bud Light were sold this April and May compared to last year, according to NielsenIQ data cited by Bank of America.

Anheuser-Busch is far from the only major corporation reeling with major stock losses due to anti-trans pushback. Perhaps the most notable other example is Target, whose stock has crashed 17% over the past month after the company faced criticism for its Pride Month clothing.

Anheuser-Busch Stock Enters Bear Territory Amid Anti-Trans Bud Light Backlash (Forbes)

How Trans TikTok Star Dylan Mulvaney Became A Far-Right Target After Scoring Deals With Bud Light And Nike (Forbes)

6.7 million.