Anheuser-Busch InBev Earnings: Disastrous U.S. Performance Masks Underlying Improvement in Latin America

The severity of the impact of the Bud Light saga was visible in Anheuser-Busch InBev's first-half earnings report, but we take two major positives from the update. First, management's comments that Bud Light's share has not worsened since April, when a boycott of the brand began, suggests further downside risk from the marketing mishap is probably limited. Second, this was another indication that margins have bottomed in Latin America, a key driver of ABI's economic profit. We retain our $90 fair value estimate of the ADRs and our wide moat rating, and believe there is still material upside to the stock from its market value on Aug. 3.