2023-05-03 07:54:39 ET
JPMorgan upgraded Molson Coors ( NYSE: TAP ) on Wednesday to Neutral from Underweight after factoring in the recent material market share gains within domestic premium light beer to the company’s Miller Lite and Coors Light brands and stronger than expected performance from the beer company in Q1.
Analyst Andrea Teixeira said it is still early days in assessing both the near- and longer-term implications from the Bud Light controversy, but noted it makes sense to move to the sidelines as the situation continues to play out over the coming weeks and months.
"Keeping us on the sidelines is also that TAP raised the bar post-2023 in aiming to grow above +LSD% organic top line, which could prove more difficult in a more normalized environment. Near term, inflation remains a headwind, macro uncertainty remains, and the consumer environment continues to evolve, particularly given a soft end to 2022 from an industry-wide perspective."
JPMorgan's price target on TAP of $64 is based on a ~8.8x EV/ EBITDA multiple off the 2024 EBITDA estimate with TAP shares expected to re-rate to the historical average given recent share shifts.
Shares of TAP gained 0.65% in premarket trading on Wednesday to $65.50 to follow on the 7.66% rise on Tuesday.
More on the Bud Light backlash:
Molson Coors to benefit from Bud Light controversy - Evercore
Anheuser-Busch CEO responds amid Bud Light ad controversy
Bud Light ad controversy could sting suppliers - Truist
Bud Light marketing executive takes leave of absence amid ad controversy
For further details see:
Molson Coors shakes off prior bear call at JPMorgan but limited upside seen