Disposing of its food business should allow the narrow-moat company to materially enhance its pricing power as a consumer health pure play.
Growth is slowing, but we see profits improving.
Despite lower fiscal 2016 growth guidance, we expect medium-term margin expansion at the early life nutrition business to drive high-single-digit organic free cash flow growth over the next five years.
The pullback in AB InBev’s stock price is a compelling opportunity for long-term investors.
Anheuser-Busch represents one of the strongest franchises in global consumer staples, with a wide economic moat, and should appeal to long-term investors at today’s price.
Long-term drivers remain intact, and we expect the company's wide economic moat to ensure that current headwinds are temporary.
The deal, for a total consideration of $47 billion, or $56.50 per share, would slightly enhance British American Tobacco's competitive positioning.
The wide-moat firm offers a modest upside to our fair value estimate, though we recommend waiting for a wider margin of safety before building a position.
The acquisition gives this wide-moat consumer-product maker additional exposure to premium-priced products, which should round out the price mix of company's household and personal care portfolio.
The asset swap with Ambev should be beneficial to moats and margins.