Molson Coors Beverage Company ( NYSE: TAP ) showed a gain on Friday after Cowen upgraded the beer stock to an Outperform rating.
Analyst Vivien Azer said that after a decade of revenue declines, the firm now views TAP as being on much firmer footing to deliver solid revenue growth fueled due to market share gains in beer and consistent beer pricing. Incremental growth from near-beer categories are also expected to contribute.
Azer said pricing has been a helpful offset to cost headwinds, but reminded that TAP is also well positioned to capture consumer downtrading.
"Over the last year, TAP has made meaningful strides in reorienting its beer portfolio, having reduced roughly 1/3 of its economy SKUs, while continuing to drive improvement for Coors Light and Miller Lite. After showing diminishing monthly market share losses over the course of 2022, TAP gained market share in beer in the most recent four-week period."
The capital return story with TAP is also seen having some potential to improve with higher dividends and meaningful buybacks in 2024 anticipated.
Cowen assigned a price target of $60 to TAP based off a 14.5X multiple of FY24 EPS.
Shares of Molson Coors ( TAP ) rose 1.35% premarket to $50.25.
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Molson Coors is upgraded at Cowen with cheaper beer portfolio seen as an advantage