2023-06-06 07:26:05 ET
Bank of America upgraded Molson Coors Beverage Company ( NYSE: TAP ) on Monday to a Neutral rating after having it set at Underperform.
Analyst Bryan Spillane said the rating change is based on our view that recent U.S. market share gains related to the Bud Light boycott have lasted long enough to positively impact sales and earnings. Molson Coors ( TAP ) is also noted to have made progress on elements of its revitalization plan. That progress has resulted in a stronger TAP balance sheet with leverage now below 3.0X net debt/underlying EBITDA. Spillane and team think reliable profit growth and greater capability to service the sudden demand surge may not have been possible four years ago.
While BofA pulled its bearish view on TAP, the firm is still generally cautious on the path ahead.
"However, TAP still mainly competes in the domestic beer category which has been growth impaired for years. In addition, we are skeptical of the company's long term sales potential."
BofA's price objective on TAP of $68 is now based on 15.0X the higher FY24 EPS estimate of $4.52. TAP is now valued line with its 10-year average forward price-to-earnings multiple and a 5% discount to brewer peers.
Shares of TAP tracked 1.10% higher in premarket trading to $64.51 vs. the 52-week trading range of $46.69 to $66.67
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Molson Coors breaks free of bear rating at BofA with U.S. market share gains strong