Savvy Confidential: A Briefing for Investors : Analysts Drink Up Good News on Brewers

Brewers Anheuser-Busch Cos. and Adolph Coors Co., whose shares outstripped most U.S. beverage companies in the last year, could gain even more as the growing thirst for beer lets them keep raising prices.

The population of their biggest customers--men in their 20s--is increasing for the first time in five years. And rising wages, unemployment at 29-year lows and the end of discounting by rival brewers should let Anheuser-Busch and Coors boost prices even beyond their recent increases.

“It really doesn’t get much better than that,” said analyst Douglas Lane of Merrill Lynch & Co.

Shares of Anheuser, the world’s largest brewer with brands such as Budweiser and Michelob, have jumped 60% in the last 12 months. Shares of the St. Louis-based company, which closed unchanged at $77 Wednesday on the New York Stock Exchange, could reach $90 in the next 12 months, analysts said.

Coors, which is up 27% in the last year, eased 25 cents Wednesday to close at $56.81 on the NYSE. The Golden, Colo., company’s stock could rise to $71, said analyst Caroline Levy of Schroder & Co.

Their gains have topped those of other big beverage companies. Stock of Coca-Cola Co., for example, dropped 11% in the last year, while PepsiCo Inc. rose 6%.

Shares of the big brewers still trade at a discount to other beverage companies, analysts note.

Anheuser-Busch and Coors trade at 27 and 23 times estimated 1999 earnings, respectively, versus 1999 price-to-earnings multiples of 44 for Coca-Cola and 28 for Pepsi.