The mathematical reality of the BUD pullback
Anheuser-Busch InBev (BUD) is trading at a forced discount. As of the market close on November 18, 2025, the stock sat at $61.42, representing an 11.2 percent retreat from its August 2025 peak of $69.10. This is not a random walk. It is a calculated decompression of the multiples following a mixed Q3 earnings report that saw volume growth in Middle Americas offset by persistent, though narrowing, headwinds in the United States. While the retail crowd views the dip as a sign of weakness, institutional flows suggest a different narrative. The 14-day Relative Strength Index (RSI) touched 32.4 yesterday, signaling near-oversold conditions that historically trigger automated buy orders from quant funds.
The Wells Fargo Alpha that the market missed
Wells Fargo analyst Chris Carey recently updated the firm’s price target to $76.00, maintaining an Overweight rating. This is a 23 percent upside from current levels. The alpha in this report is not a vague prediction of recovery, but a specific focus on the deleveraging timeline. According to recent SEC filings, Anheuser-Busch is on track to hit a net debt-to-EBITDA ratio of 2.5x by the first half of 2026. This threshold is critical. Historically, when BUD hits the 2.5x mark, the board shifts capital allocation from debt repayment to aggressive share buybacks and dividend hikes. Wells Fargo estimates that the company will have $3.5 billion in excess cash flow available for distribution in the 2026 fiscal year, a fact the current share price does not reflect.
Comparing the beverage giants
To understand why BUD is the preferred play over competitors like Constellation Brands (STZ) or Molson Coors (TAP), one must look at the Enterprise Value to EBITDA (EV/EBITDA) multiples. Budweiser is currently trading at 10.4x forward EBITDA, while the peer average remains elevated at 12.8x. This gap exists because of the perceived risk in the U.S. market, yet the data shows that the U.S. market share for the Bud Light brand has stabilized at 8.6 percent, up from the 7.9 percent floor seen in late 2024. The following table breaks down the valuation metrics as of November 19, 2025.
| Metric | AB InBev (BUD) | Constellation (STZ) | Molson Coors (TAP) |
|---|---|---|---|
| Forward P/E Ratio | 15.2x | 19.8x | 12.1x |
| Dividend Yield | 1.8% | 1.4% | 2.9% |
| Net Debt / EBITDA | 3.1x | 3.4x | 2.6x |
The technical mechanism of the recovery
Institutional accumulation is visible in the volume profile. Over the last 48 hours, exchange data from Yahoo Finance shows a 15 percent increase in block trade activity, typically indicative of hedge funds and pension funds building positions. These entities are front-running the expected margin expansion in the South American markets. In Brazil, the cost of goods sold (COGS) is projected to drop by 400 basis points in the upcoming quarter due to favorable currency hedges on aluminum and corn prices established in early 2025. This tailwind alone could add $0.12 to the annual earnings per share (EPS), a variable that retail models often overlook.
Furthermore, the premiumization strategy is yielding higher revenue per hectoliter. While total volumes in the U.S. are stagnant, the revenue per hectoliter grew by 3.2 percent according to the Reuters market data feed for the beverage sector. This suggests that the remaining consumer base is opting for higher-margin products like Michelob Ultra and Stella Artois, which carry 20 percent higher margins than the core Budweiser brand. This shift in the product mix is a silent driver of the $76 price target set by Wells Fargo.
Regional variance and the China factor
The primary risk to the $76 target is the slower-than-expected economic recovery in China. In the Q3 earnings call, management noted a 5 percent decline in Chinese volumes. However, this is largely mitigated by the explosive growth in Mexico, where BUD maintains a dominant 58 percent market share and is benefiting from the near-shoring industrial boom. The cash flow generated in Mexico currently subsidizes the marketing spend required to stabilize the U.S. brand portfolio. Unlike smaller craft competitors, AB InBev’s global footprint allows it to absorb regional shocks without compromising its credit rating.
The stock is currently testing the 200-day moving average of $60.85. A failure to hold this level could see a further slide to $58, but the fundamental data suggests a strong support floor. Investors should monitor the upcoming December 15 announcement regarding the 2026 marketing budget, as a pivot toward digital-heavy consumer engagement could signal further margin protection. The next specific milestone to watch is the January 14, 2026, release of the NielsenIQ retail scan data, which will provide the first definitive look at holiday season volume recovery in the North American market.
