Anheuser-Busch InBev (NYSE:BUD), the world’s largest beer company, has been in the news due to severe backlash following a partnership of its Bud Light brand with transgender influencer Dylan Mulvaney. The decline in Bud Light sales due to the controversy favorably impacted rival Molson Coors (NYSE:TAP). In general, beer and beverage companies are considered to be relatively resilient to macro pressures compared to companies in several other sectors. Bearing in mind the beer category’s resilience and the ongoing Bud Light controversy, we used TipRanks’ Stock Comparison Tool to place Anheuser-Busch, Constellation Brands (NYSE:STZ), and Molson Coors against each other to pick the most attractive beer stock as per Wall Street experts.
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Anheuser-Busch InBev (NYSE:BUD)
Trouble for Anheuser-Busch started in early April when conservatives called for a boycott of Bud Light following a social media promotion by Mulvaney. Bud Light, one of the company’s major brands, has been facing notable volume declines since then.
In early May, HSBC analyst Carlos Laboy downgraded BUD stock to Hold from Buy, citing concerns about how the company will reverse the erosion of its U.S. volumes in the wake of the Bud Light crisis. The analyst lowered his price target to €66 from €68.
Meanwhile, on May 30, Citigroup analyst Simon Hales reiterated a Buy rating on Anheuser-Busch with a price target of €68. Hales noted that the weekly U.S. Nielsen data through May 20 indicated that Bud Light volumes and sales decline accelerated compared to the week ending May 13.
That said, Hales highlighted that on a relative share basis, Bud Light’s volume share declines indicate a slight stabilization in share losses compared to recent weeks. While the latest data shows little sign of consumers moving on from the Bud Light controversy, Hales believes that the pullback in BUD shares “creates an interesting entry point for longer-term investors.”
Despite the ongoing controversy, last week, Anheuser-Busch InBev and FIFA extended their nearly 40-year partnership, with the company being named as the official beer sponsor of the FIFA Women’s World Cup 2023 and the FIFA World Cup 2026.
Is BUD a Good Stock Buy?
Wall Street is cautiously optimistic on Anheuser-Busch InBev, with a Moderate Buy consensus rating based on three Buys and two Holds. The average price target of $70.40 implies nearly 28% upside potential. BUD shares have declined over 8% year-to-date.
Constellation Brands (NYSE:STZ)
Constellation Brands, one of the leading beer, wine, and spirits makers, reported mixed results for the fiscal fourth quarter. The company’s Q4 FY23 (ended February 28, 2023) net sales declined 5% to nearly $2.0 billion, missing analysts’ expectations. Meanwhile, adjusted EPS fell 16% to $1.98.
The company expects its FY24 results to gain from the strength in its beer brand portfolio, which includes imported beer brands like Corona Extra and Modelo Especial, improvement in its wine and spirits portfolio, its strategy to improve margins by focusing on premium brands, and the expansion of its production capacity to support the growth of its high-end Mexican beer portfolio.
On May 30, Roth MKM analyst William Kirk upgraded STZ stock to Buy from Hold and set the price target at $270. The analyst thinks that warmer weather will drive accelerating share gains for Modelo Especial and Corona.
Further, Kirk noted that for April, much of Anheuser-Busch’s Bud Light share losses went to other premium Light products. That said, he expects substitution to shift seasonally in Constellation’s favor. The analyst projects an upside in STZ’s shipments and depletion (indicates sales by distributors to retailers) compared to consensus estimates.
Is Constellation Brands a Good Stock to Buy?
Wall Street’s Strong Buy consensus rating is based on 15 Buys and two Holds. The average price target of $264.76 suggests over 8% upside. Shares have advanced 5.5% so far this year.
Molson Coors (NYSE:TAP)
Molson Coors’ sales and stock have benefited immensely from rival Anheuser-Busch InBev’s plight. The company’s Coors Light and Miller Light beer brands have gained market share since the Bud Light controversy started.
The stock has received three upgrades from analysts since May and several analysts have reiterated their Buy ratings. Last week, Bank of America analyst Bryan Spillane raised his rating on Molson Coors to Hold from Sell and increased his price target to $68 from $54.
The analyst explained that his rating changed as recent U.S. market share gains related to the Bud Light boycott have lasted long enough to positively impact Molson’s sales and earnings.
Spillane contended that while it is difficult to determine the duration of the Bud Light boycott, it has already lasted longer than industry executives anticipated and could impact the July 4th holiday.
“TAP appears able to service the demand spike due in part to supply chain improvement (part of the revitalization plan) and learnings from COVID supply chain stress,” concluded Spillane.
Is TAP Stock a Good Buy?
With five Buys, nine Holds, and one Sell, Molson Coors commands a Moderate Buy consensus rating. Given the 30% year-to-date rise in the stock, the average price target of $65.43 implies a possible downside of 2.5% from current levels.
Conclusion
Molson Coors has benefited from the anti-LGBTQ backlash that Anheuser-Busch has been facing since April. TAP shares have outperformed BUD and STZ year-to-date. That said, the optimism seems priced into Molson Coors stock and the average price target does not indicate further upside. While Constellation Brands enjoys more bullish reviews than Anheuser-Busch due to the ongoing risks associated with the latter, Wall Street sees more upside in Anheuser-Busch, with some analysts viewing the pullback as an attractive opportunity to build a position in the stock with a long-term investment horizon.
