Anheuser-Busch (NYSE:BUD) is that rare company that needs no introduction. Its stock, however, could use a lift. After trading near $50 at the turn of the 2004/2005 year, the price proceeded to dip to just above $40 and now trades around $43.
Growth has been slow for the big brewer. Revenue for 2005 was just about $15 billion, up from $14.9 billion in 2004 and $14.1 billion in 2003. The fourth quarter of 2005 was rough around the edges. Net revenue was flat at $3.9 billion and net income dropped 40% to $201 million.
News since then has been relatively good. A little over a month ago, Stifel Nicolaus beverage guru Mark Swartzberg said he expected Anheuser-Busch to move away from the discount programs it relied on to drive unit growth, which should be good for revenue. More recently, India's Economic Times ran a report saying that the beer giant is looking at M&A and joint ventures in the world's second most populated country.
And Bear Stearns analyst Carlos Laboy raised his rating on A-B, according to media reports, due to its entry into the Russian market and an improvement in the U.S. beer market, especially sales of higher end products where the company targets Michelob. Laboy was quoted by Forbes as saying that he believed that the company's prospects "should improve materially by 2007".
Rumor has it that the oldest recipe for beer came from the Sumerians 3,900 year ago. It obviously took a long time for one company to dominate the market, at least here in the U.S. With improving potential overseas and a strengthening market in America, Anheuser-Busch stock does not have much upside priced into it. If the crystal balls on Wall Street are seeing clearly, the stock could get back to $50 this year.
BUD 1-yr Chart
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine, which was on the Adweek 10 Hottest Magazine two separate years. He was also president of Switchboard.com which was at the time the 10th most visited site on the internet, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc., and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at firstname.lastname@example.org.