USA: Anheuser-Busch stock downgraded over slowing beer sales
Anheuser-Busch Cos. was downgraded by the Investment firm Stifel Nicolaus to "hold" from "buy" Friday, September 22, according to The Associated Press. Stifel Nicolaus cited slowing beer sales. Anheuser-Busch's sales to retailers grew 1.8 percent in the first half of the year but slowed to 0.5 percent in July and August and were flat excluding the Rolling Rock brand, which it acquired earlier this year.
"We expected the slowdown, but the magnitude has been greater than expected," said Stifel Nicolaus analyst Mark Swartzberg said. "We no longer see risk of positive earnings revisions over the next 12 to 18 months." Stifel reduced its 12-month target price to $50 from $52.
Anheuser-Busch shares fell 65 cents, or 1.4 percent to $46.97 in morning trading on the New York Stock Exchange. The 52-week high of $50 was set Aug. 29; the low of $40.15 was set Oct. 27.
The five-year sales trend also is discouraging, Swartzberg said. The St. Louis-based brewer's domestic volume has grown from 101.7 million barrels in 2001 to 102.5 million barrels in 2006, an average annual growth of 0.2 percent.
Higher-priced import and craft beers, as well as wines and distilled spirits, have been cutting into the sales of traditional beers, such as Budweiser and Bud Light. "Anheuser-Busch is big (nearly 50 percent share), and the majority of its sales come from segments that consumers are leaving in favor of 'better booze,' beer and otherwise," Swartzberg said.
Stifel Nicolaus seeks to do business with the companies it covers; the analyst doesn't own shares.
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