Analyst Note| Philip Gorham, CFA, FRM |
Anheuser-Busch InBev, or AB InBev, the world's largest brewer, blew away S&P Capital IQ consensus estimates in the third quarter, with a remarkably robust volume. There was also modest upside to our above-consensus estimates, with pleasing volume growth in both Brazil and the U.S., the firm's two largest markets. While this is clearly a big step in the right direction, we suspect that to a degree, shipments were propped up by subsidies to consumers and channel restocking, and we expect market volatility to remain for the next few quarters. The suspension of the interim dividend supports this view. Nevertheless, this was a strong quarter from a frim that has offered precious little good news in the last few years. We have made minor adjustments to our assumptions, mainly to reflect the more difficult comparable AB InBev will now face in 2021, and retain our USD 96 fair value estimate for the ADRs, as well as our wide moat rating.