DJ Anheuser-Busch Stock Might Not Be Done Dropping Yet -- Barrons.com

By Ben Levisohn

Anheuser-Busch stock is falling after analysts at Jefferies cut its shares to Underperform from Hold.

-- The back story. Anheuser-Busch (BUD) stock has dropped 39% over the past
12 months after the company was forced to cut its dividend in half to
focus on paying back bondholders. The S&P 500 is down 5.6% during the
same period. But recent reports that the company might spin off its Asian
business have driven a small rally in the stock so far this year. Heading
into today's session, the stock was up 10% in 2019.

-- The plot twist. Jefferies analyst Edward Mundy and team acknowledge that
with the dividend cut out of the way, and the economies in developing
nations doing somewhat better, Anheuser-Busch has a couple of things
going for it. Unfortunately, the beer maker's large market share could be
under pressure from smaller competitors, and the competition might
squeeze its profit margins. Earnings growth could now be around 5% in
2019 and 2020, according to Jefferies estimates, down from 12% in 2017
and 2018. "ABI is a strong business and a company that we continue to
admire for the long run," writes Mundy. "However, as an investment, we
believe that market share pressures, some of which have only recently
become visible, will likely persist, and could lead to disappointment
against high expectations of an EM-led recovery."

-- Moving forward. Anheuser-Busch stock has dropped 2.7% to $70.57 as of
12:14 p.m. Wednesday. It's not the safe stock it once was, and its shares
are best left to investors looking for beaten up stocks and willing to
wait for a turnaround.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

(END) Dow Jones Newswires

January 16, 2019 12:18 ET (17:18 GMT)

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