Morgan Stanley calls Anheuser-Busch InBev (BUD -1%) one of the "best of breed" companies within the consumer staples sector.
The Morgan team cites the solid visibility on A-B's free cash flow, high margins and quality management in making its call.
"It is one of the fastest-growing global FMCG companies with 5-6% organic sales growth in the medium term,and earnings are also underpinned by cost savings from the SAB acquisition until FY19e," reads the MS note.
"Management has a strong track record of delivering cost synergies,as seen in the AB and Modelo deals. SABMiller markets (Peru, Colombia, South Africa and rest of Africa) offer substantial upside from premiumisation and the roll-out of ABI global beer brands, creating revenue synergies."
A-B is forecast to see its net debt-to-EBITDA ratio fall to 3X in FY20 from 4.7X last year, which would leave some room for M&A or higher capital returns.
The beer stock is rated by Morgan Stanley at Overweight.
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