USA: Anheuser-Busch downgraded by Bear Stearns

Bear Stearns downgraded Anheuser-Busch (BUD) to underperform from peer perform Thursday, saying it is "highly skeptical of the company's aggressive price discount strategy," Dow Jones Newswires communicated on July 21.

Analyst Carlos Laboy said after a tour of beer markets in Texas and Florida, "We are not convinced that A-B's initiatives will provide adequate revenue lift, support EPS expectations, or correct the domestic beer category's image problems."

Bear Stearns also cut its Anheuser-Busch earnings forecast for the second quarter to 81 cents a share from 82 cents a share, its fiscal 2005 forecast to $2.73 from $2.75. and its 2006 forecast to $2.84 from $2.90.

Laboy noted that management at SABMiller PLC's (SAB.JO) Miller Brewing Co, said Wednesday that it had gained "1.2 points of pricing and 0.6% share gain for Miller Lite" during the two-week July 4 selling season. Miller said Anheuser-Busch half a point of pricing and half a point of market share. "We are unconvinced that undercutting A-B's long-held price advantage over Miller is working or is in any domestic brewer's long-term interest," Laboy said.

Bear Stearns has done investment banking for SABMiller. Leboy does not own shares in either company. Shares of Anheuser-Busch, St. Louis, closed Wednesday at $45.94.

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