Bud Light Uproar Could Boost Boston Beer, Constellation Stocks

Kirk cited recent boycotts of Bud Light, and other tailwinds, for the upgrades. Some consumers are boycotting Bud Light and other brands owned by parent Anheuser-Busch InBev (BUD) after the company worked with transgender influencer Dylan Mulvaney on a social media promotion in April. Industry publication Beer Business Daily said that Bud Light’s sales volumes were down 21.4% from a year earlier in the four weeks ended April 29, while overall industry volumes fell 3.2%.

The backlash doesn’t appear to be over, either. Over the Memorial Day weekend, many Twitter users posted photos of shelves full of Bud Light, suggesting a lack of demand for the product.

In response to the initial criticism, Bud Light said that it “never intended to be part of a discussion that divides people. We are in the business of bringing people together over a beer.” The company also put two marketing executives on leave after the collaboration.

Anheuser-Busch didn’t immediately respond to Barron’s request for comment.

Boycotts aren’t the only issue for Bud Light’s sales, Kirk notes. Time of year might also play a role. According to Kirk’s data, people switch between Corona and Bud Light more in the summer than in the spring.

Kirk on Tuesday raised his price target on Constellation stock to $270 from $216 in April, implying a roughly 14% upside from Tuesday’s intraday price of $236.50. Kirk also raised his price target on Boston Beer to $386 from $274, an implied 15% jump from Tuesday’s intraday price of $338.

Boston Beer stock jumped 7% Tuesday, but shares have struggled in recent months. The company has experienced a downturn in sales sparked by declines in hard seltzer.

Kirk says he thinks Boston Beer’s downturn can be reversed if Bud Light’s sales keep falling. “We believe Seltzer and Truly will benefit in the summer from Bud Light’s share losses,” Kirk said.

He says he’s already seen Boston Beer take some share of the market. According to data cited by the analyst, Boston Beer’s depletions—or cases sold to retailers such as grocery stores by its distributors—underperformed the total beer segment by four percentage points in April, but early May data show just a two-point underperformance.

NielsenIQ data cited by Goldman Sachs’ Bonnie Herzog in a note Tuesday supports Kirk’s hypothesis, too. In dollar terms, Truly’s sales are down from a year ago but have expanded in the week ending May 20 versus a week earlier.

If some customers are reaching for anything but Bud Light, Boston Beer and Constellation will be happy to provide.

Write to Karishma Vanjani at [email protected]