Tuesday, September 05, 2006

Calls of Note Part 7

- JP Morgan is raising their Q306 EPS estimate on Anheuser-Busch (NYSE:BUD) to $0.83 and 2007 EPS estimate to $2.84. Firm thinks EPS consensus for 2H06 (Q3: $0.81, Q4: $0.27) assumes a +2% pricing forecast, versus their new +3.3% estimate. Firm's Q406 EPS estimate
remains unchanged as they are taking MDandA estimate up (offsetting increased net rev/bbl forecast) based on higher options expense and management's change to full year guidance from down to flat.

Firm thinks pricing in 2H06 will exhibit the same sequential pattern as the last several years prior to 2005. They anticipate a sequential decrease in absolute net revenue per barrel in Q3 due to seasonal discounting and a sequential increase in Q4 as discounting abates. Firm applied the average absolute sequential change from prior years (excl 2005) to Q306 and Q406 to arrive at new forecast. Given the continuous sequential decline in pricing each quarter in 2005, the year-over-year pricing forecast for 2H06 is higher than historical levels.

They performed a similar analysis using CPI data and scanner data. All three analyses point to pricing that should come in noticeably above what they believe to be consensus for the back half of the year, +1.5-2.0%.

Reits BUD Neutral.

Notablecalls: BUD is in a nice uptrend and JP Morgan's comments surely support the trend.

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