Stock Market View: High Expectations for AB InBev

(ABM FN) AB InBev is expected to report lower second-quarter volumes, but higher sales and underlying earnings before interest, taxes, depreciation and amortization growth of 8 percent, according to analysts’ consensus estimates published by the brewer.

Volumes fell 0.6%, due to a 3.7% decline in North America, analysts said. Sales, on the other hand, are expected to increase 3.5% and earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to increase 8.3% to $5.28 billion.

DeGroff Peterkam analysts are more cautious about the second quarter than the consensus, as the outlook is clouded by various factors. For example, there is a more difficult basis for comparison for China, as volumes rebounded there a year ago due to the end of coronavirus restrictions. The phased distribution of advertising dollars for soccer tournaments such as the Copa America and the European Championship and the various support from U.S. wholesalers could also cloud the picture.

DeGrove Petercam analysts are less than unanimous on revenue growth, especially in South America, where hyperinflation in Argentina poses accounting challenges.

DeGroff also expects EBITDA to come in at $5.20 billion, as Europe and Asia will be less profitable than the consensus forecast.

However, DeGrove stressed that the consensus is pointing to a positive trend. The EBITDA forecast is above the 4-8 percent band that AB InBev is using as a forecast. So an increase in the forecast is possible, DeGrove analyst Fernand de Boer believes, although that could only happen in the third quarter.

AB InBev publishes its quarterly figures on August 1. Degroof Petercam has a buy rating and a price target of €64.00. The stock was up 1.3 percent at €55.36 on Wednesday afternoon.

Source: ABM Financial News

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