In an AP Story today, at least two market analysts upgraded the stock of Anheuser-Busch (BUD) from “Hold” to “Buy.” One analyst citied as his reason that “[e]arly 2006 volume momentum is encouraging and price increases are holding.” The other was “encouraged by recent brand acquisitions and positive volume trends,” specifically stating that A-B’s “sustained push into the U.S. high-end with Grolsch, Harbin and Tiger are small but positive steps.”
I’d laugh if it weren’t so damned sad and predictable. Both of these analysts seized upon information that Anheuser-Busch itself released as part of its thinly veiled propaganda campaign to get the share price up, none of which do anything to really address the trends that people are drinking less of their beer.
From the AP Story:
Shares of Anheuser-Busch Cos. inched up Tuesday after a long slump as two analysts upgraded America’s biggest brewer, one calling the sentiment on the company too negative.
“After 18 months of share price decline, industry volume slump, and price warfare, the sentiment on BUD now appears overly pessimistic relative to a moderated growth outlook,” wrote Deutsche Bank analyst Marc Greenberg in a client note, upgrading the company to “Buy” from “Hold.”
The analyst added he sees a better tone in the market than a year ago this time.
“Early 2006 volume momentum is encouraging and price increases are holding,” he wrote. “Investor sentiment, however, remains fairly cynical, both qualitatively and quantitatively.”
Bear Stearns analyst Carlos Laboy also upgraded the St. Louis, Mo., brewer, saying in a client note he was “encouraged by recent brand acquisitions and positive volume trends.”
The U.S. beer category, which has seen lackluster sales as of late, is rallying, he said, adding “we believe this industry rally will benefit A-B directly.”
Laboy, who upgraded the company to “Peer Perform” from “Underperform,” said the brewer’s move into Russia and its “sustained push into the U.S. high-end with Grolsch, Harbin and Tiger are small but positive steps.”
The second analyst also claims that the “U.S. beer category” (by which he undoubtedly means only the big three players) is “rallying.” Of course, he offers no evidence of any rally, just that he believes it. Now I know our markets are only as strong as our belief in them and that if everybody lost faith in our monetary system or our economic system as a whole then it would, in fact, collapse. But this is just such a blatant case of wishful thinking trying to become a self-fulfilling prophecy that all I can do is shake my head wistfully. First there’s a rally that doesn’t exist and that rally is the basis of optimism that will turn around a huge coporation’s business woes. It’s hard to believe people really do have any faith in this system yet this was reported without any tongues near a cheek (not counting mine).
The more I follow this, the more and more desperate it all appears. With each new step taken, the Emperor’s clothes are looking increasingly threadbare. I really hope the craft brew industry can seize upon what is looking like a marvelous opportunity to build some momentum that actually has a chance of reaching that magical tipping point. Every small brewery whose business is posting terrific gains should be hounding their local press to have their story told. All the local newspapers and television news shows should be actively looking for positive business stories to persuade their audience that the economy is doing fine, despite all evidence to the contrary. Let’s give it to them. If you’re a craft brewer who’s doing well, start crowing.