Could this be the start of the comeback story for Bud Light?

On Friday, shares of Bud Light's parent company Anheuser-Busch InBev (BUD) were up as much as 4% after Bank of America upgraded AB InBev stock from Neutral to Buy. Analysts there see improved profit growth as the impact of the Bud Light boycott fallout, input cost pressures, and its investments in Latin America are already baked into the stock price.

"Anheuser-Busch InBev's margins are at an inflection point, in our view, as cost of goods sold (COGS) pressures have started to ease, [the greater than] $1 billion profit hit from Bud Light is in the base and a higher cost of doing business, which has weighed on margins in recent years, is now largely in the base too, we believe," Bank of America analyst Andrea Pistacchi wrote in a note to clients.

AB InBev stock has looked to recover amid a rocky year for the company. Year to date, AB InBev stock is down 7.7%, while shares of its competitors Molson Coors (TAP) and Constellation Brands (STZ) are up 23% and 8%, respectively.

A turning point for declining Bud Light margins

Margins have been declining at the beer giant since 2018, but BofA expects a 300-basis-point increase in the next three years.

"From a top-down perspective, in the current environment, ABI offers relatively good earnings visibility, with its Latin America exposure (which should be fairly resilient) and earnings per share growth supported by pricing power, cost of goods deflation and deleveraging," Pistacchi wrote. However, the analysts don't see margins returning to 2019 levels.

In its most recent quarterly results, the company posted a slight beat on earnings per share, coming in at $0.72, compared to $0.71 expected. In the third quarter, earnings per share are expected to come in at $0.89, per Bloomberg estimates. AB InBev will report earnings on Oct. 31.

Volume declines have yet to recover for AB InBev, though, as the crucial NFL football season unfolds.

This football season, beer brands are entering "uncharted waters" given Bud Light's struggles this year, Bump Williams of Bump Williams Consulting told Yahoo Finance over the phone.

Sales of Bud Light declined sharply in May after a marketing campaign with transgender influencer Dylan Mulvaney sparked a widespread boycott in April, causing it to lose the top spot to Modelo in May.

Now, six months later, Bud Light sales are still down 28.1%, compared to a year ago, according to Bump Williams Consulting data, while competitors such as Coors Light (TAP) continue to get a boost, up 19.6%.

Other brands in AB InBev's portfolio have taken a hit too. Sales of Budweiser are down 11.5% while sales of Michelob Ultra, Stella Artois, and Busch Light, among other brands, are down by single-digit percentages.

"Bud Light is likely to spend an enormous amount of money to try to rebuild its brand after the shocking declines earlier this year," Tim Calkins, a marketing professor at Northwestern University, told Yahoo Finance previously. "The competitors are going to work very hard to make it difficult for Bud Light to do that."

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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].

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