BRBR – Moving to the Best Idea Long list. BellRing Brands is a new Best Idea long. Tailwinds in health, fitness, and wellness drive the growth in the functional beverage category. Recent capacity expansions will enable management to increase flavors, innovation, and promotions while targeting new customers, including GLP-1 patients. Over a trade duration, we expect the positive estimate revisions will continue to be a tailwind for share outperformance. We see an upside of over 30% from current levels as estimates continue to be raised and rolled forward. For additional details, please see our separate note. For the Elevator Pitch report on BellRing Brands, Click Here.
BUD – Higher on the Short Bias list. AB InBev moves to the top of our Short Bias list. Bloomberg reported that U.S. retailers are reducing shelf space for Anheuser Busch brands by an average of 10-15%. The largest beneficiary is Molson Coors, which has said its core brands will gain 10% more shelf space this year.
COST – Lower on the Best Idea long list. We are pushing our expectations for a membership fee increase out of F2024. A new management team is unlikely to raise membership fees as the first order of business when the business is humming along, and inflationary pressures have faded. Although our EPS estimates remain above consensus expectations, the valuation entering Quad 2 and 3 suggests less upside to the shares.
WMT – Lower on the Best Idea long list. The improvement in general merchandise sales is also a gross margin tailwind. Our EPS estimates remain above consensus expectations, but the valuation entering Quad 2 and 3 suggests less upside to the shares.
Our updated position monitor:
