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HSBC lowered its rating on Heineken N.V. (OTCQX:HEINY) to Hold from Buy on concerns the beer volume recovery will take longer than anticipated to play out.
Analyst Carlos Laboy said the overall beer story is simple as strong price increases across the world have left consumers unable to sustain volume growth for beer and other beverages until 2025 in many key markets like Europe, Mexico, and Brazil. More specific to Heineken (OTCQX:HEINY), Laboy found fault in the C-suite.
"Management cut its EBIT guidance to a wide range of low-single-digits to high single-digits. We find such a wide range unhelpful and it raises the question of why, more than three years into the EverGreen strategy, it cannot produce a tighter outlook with a reasonable level of conviction as to how it is budgeting 2024."
Laboy said that with Heineken's brands still strong, it is too bad management that has put a question mark over whether it has a handle on planning and budgeting.
Looking ahead, HSBC sees 6.9% organic revenue growth for Heineken (OTCQX:HEINY) in 2024, 4.7% EBIT growth, and 1% EPS growth.
Shares of Heineken (OTCQX:HEINY) are down more than 5% this week in European trading after the beer giant's profit outlook rattled investors.