Analyst Note| Philip Gorham, CFA, FRM |
Anheuser-Busch InBev, or AB InBev, reported first-quarter results that were in line with our forecasts from a volume and revenue perspective, but with weaker margins than we had expected. We have lowered our margin assumption for first-half 2020, but this has little impact on our $96 fair value estimate for the ADRs. We expect the coronavirus pandemic to hit AB InBev harder than most consumer staples firms, but we think the business has enough liquidity to manage through the current crisis, and we continue to like the business for the long term. It's monopoly like positions and cost advantages in developing markets should ensure strong long-term cash generation that is not currently priced into the stock.