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Bud Light stock surges on earnings; Is the boycott finally over?

Bud Light stock surges on earnings; Is the boycott finally over?

In the wake of a challenging couple of months marked by declining sales and tumbling stock price, the shares of Bud Light owner Anheuser-Busch InBev (NYSE: BUD) received a much-needed boost on Tuesday, October 31.

Notably, the stock rose more than 5% at the market open after the company reported better-than-expected Q3 results and announced a stock buyback plan even though it is still feeling the effects of boycotts.

Anheuser grew 5% YoY but down 13.5% in the US

Shares of Anheuser-Busch opened higher on Tuesday after the company reported 5% year-over-year (YoY) revenue growth to $15.57 billion, ahead of the company-compiled forecast of 4.7%. 

The surge came despite a notable drop in volumes of 3.4% as growth across the Middle East, Africa, and Asia-Pacific got overshadowed by “soft” performance in the US and Europe. The decline was sharper than analysts’ estimates of 2.7%. 

The US revenue saw a 13.5% decline, while earnings before interest, taxes, depreciation, and amortization (EBITDA) plummeted 29.3% due to “market share performance,” coupled with high marketing spend and productivity loss. 

The drop marks the second consecutive quarter in which the controversy around Bud Light’s marketing campaign from earlier this year has weighed on the brewer’s sales, depriving it of the top spot in the US beer market. 

In the meantime, organic sales came in at 5%, topping the consensus estimates of 4.7%. 

Investors welcome $1 billion stock buyback plan

Although the Q3 results were not as bad as some expected, the highlight of the report from investors’ perspective was the announcement of a share repurchase plan.

In particular, the company said it plans to buy $1 billion worth of its stock over the following 12 months, and said it had approved a cash tender of up to $3 billion in outstanding bonds as part of its “focus on deleveraging.”

Bud Light stock price analysis

At the time of writing, shares of Bud Light were sitting at $56.72, up around 5%.

BUD 1-day price chart. Source: TradingView

The stock has gained almost 6% over the past five trading sessions, while its monthly performance stands at +1.9%. 

Looking ahead, analysts were discouraged after Anheuser-Busch reiterated its broad 4-8% EBITDA growth guidance for the fiscal year instead of expecting it to land toward the top end of that range. 

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