Winter is NOT Coming for Anheuser-Busch: Goldman Sachs Warms to Bud Light's Future!

Hear Me Roar…for Profits?

My dragons might breathe fire but it seems even the coldest hearts at Goldman Sachs are feeling the heat… or perhaps the chill of a well brewed ale! They've upgraded Anheuser Busch Inbev (the brewer of Bud Light and Corona) from 'meh' to 'buy.' Yes you heard right. It appears even the Mother of Dragons is not the only one who believes in second chances apparently so does Wall Street. This is quite the turn of events. It seems that this company will soon rise like a Phoenix from the ashes – or perhaps a dragon from its egg!

A Lannister Always Pays His Debts…and AB InBev Might Too

Analyst Olivier Nicolaï (who I assume isn't related to the late King Joffrey – one can hope!) has set a price target of $88 a 30.8% jump from last week. He claims AB InBev has the potential to become 'best in class' again. While I usually reserve such praise for myself (naturally!) I must admit seeing a company crawl out of the dungeons of public opinion is…intriguing. Apparently this hinges on managing debt like a Lannister (minus the incest hopefully) and riding some 'underappreciated' market winds. The idea that macro tailwinds will actually benefit this company is amusing the wind is usually never on your side unless you are a Targaryen.

Volume Growth is Coming?

According to this Nicolaï fellow the company should see 1.2% volume growth if the U.S. 'drag' (perhaps referring to their recent…missteps?) moderates and the Chinese market recovers. 1. 2%? That hardly sets my dragon scales aflutter! But it's enough apparently to fuel a 4.5% organic sales growth and 7% organic EBITDA growth. I hope they use that extra coin to invest in better advertising… perhaps they can use dragons to advertise their products. After all who wouldn't buy a Bud Light endorsed by the Mother of Dragons?

The Second Quarter Cometh

The next 'catalyst' (a rather dull word isn't it?) is their second quarter earnings report in July. Let's hope it's more exciting than a Dornish wedding. Of course there are 'risks' – Chinese market hiccups currency volatility. And a strengthening USD which apparently threatens their estimates. But the 'GS economists' predict more USD weakness. It is more difficult to predict the future than it is to predict who will sit on the Iron Throne it appears.

Shares That Survived the Long Night

Despite all the optimism the shares dipped slightly before the bell. A mere blip! They've already surged over 34% this year erasing the 22.5% losses from last year's… let's call it a 'challenging season.' Seems like they've weathered the storm better than most expected. They faced a storm of public controversy and came out on top hopefully they will stay on top but as we know the wheel keeps turning.

The Maesters Agree!

Apparently most analysts are bullish. LSEG data shows that eight out of ten have a 'buy' or 'strong buy' rating. Even the average analyst price target implies upside. So there you have it. Even the most cynical of Wall Street ravens are singing a song of hope for AB InBev. Now if only they could brew a beer worthy of a queen… perhaps something with a hint of dragon fire? It is important to listen to experts but even more important to think for yourself and it appears that these maesters are not wrong in this instance.