Anheuser-Busch InBev Stock Downgraded: What Next?

by Trefis Team
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Anheuser-Busch InBev
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Anheuser-Busch InBev stock (NYSE: BUD) has declined close to 8% in the last one month (ending 14th September 2021) and currently trades at $57 per share. The fall was mainly driven by JP Morgan downgrading BUD stock to ‘underweight’ from ‘neutral.’  The rationale for the downgrade was that raw material costs are likely to be substantially higher in 2022, pressuring margins. Also, analysts believe that the company seems to be in the midst of a multi-year earnings downgrade cycle, with its portfolio being significantly underweight Beyond Beer. AB InBev established the Beyond Beer unit in 2018 to focus on diversifying the group away from a beer market that was in decline in major advanced markets due to changing consumer preferences. That unit houses seltzers, canned wines and spirits, cocktails, malt-based and non-alcoholic beverages. Additionally, after the initial launch and heavy marketing support for Bud Light Seltzer, the category share for the company has stalled in the mid-teens. These factors have led to continued weakness in the stock in the recent weeks and months.

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for BUD stock average -2% in the next one-month (21 trading days) period after experiencing a 7.7% drop over the previous one-month (21 trading days) period. Also, the stock has a 45% probability of giving positive returns over the next one month. But how would these numbers change if you are interested in holding BUD stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test BUD stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF BUD stock moved by -5% over five trading days, THEN over the next 21 trading days, BUD stock moves an average of 2 percent, with 58% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of BUD Stock Movements:

Question 1: Is the average return for Anheuser-Busch InBev NV stock higher after a drop?

Answer:

Consider two situations,

Case 1: Anheuser-Busch InBev NV stock drops by -5% or more in a week

Case 2: Anheuser-Busch InBev NV stock rises by 5% or more in a week

Is the average return for Anheuser-Busch InBev NV stock higher over the subsequent month after Case 1 or Case 2?

BUD stock fares better after Case 1, with an average return of 1.9% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.5% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Anheuser-Busch InBev NV stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Anheuser-Busch InBev NV stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For BUD stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

BUD’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Anheuser-Busch InBev NV stock by changing the inputs in the charts above.

 

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