Tasting Stale? Citi Sets Neutral Ratings on Boston Beer, Molson Coors
Citi’s Wendy Nicholson upgraded the rating for the company from Sell to Neutral, while maintaining the price target of $156. The analyst said that the company’s stock reflects the lowest relative valuation since March 2010.
Analyst Wendy Nicholson pointed out that Boston Beer’s market share trends are under pressure and that the company may have to downgrade its guidance for 2016. Favorable commodity trends and share repo’s may, however, insulate the company’s EPS target for the year.
Boston Beer has been actively buying back stock in recent years, and the same could increase in the near future, given no debt on its balance sheet. The analyst further noted that this could boost the reported EPS and share price.
The company’s robust brand portfolio could make it an attractive acquisition target, Nicholson wrote.
In a separate report, Wendy Nicholson initiated coverage of Molson Coors with a Neutral rating and a price target of $97.
Molson Coors’ pending acquisition of it 58 percent stake in the joint venture with SABMiller plc is expected to have a positive impact on the former’s earnings growth in 2017. The analyst added, however, that the underlying organic growth outlook remains weak.
The beer market is in a slow growth mode in the US, Canada and Europe, and Molson Coors’ brands are losing share in these markets, Nicholson pointed out.
Molson Coors’ shares are currently trading at 15-20 percent premium to the market, versus a 58 premium after the company announced plans to acquire the joint venture stake. The reduced premium is appropriate, given the continued sluggish top line growth in the near- and long-term, Nicholson wrote.
Latest Ratings for SAM
|Jan 2017||William Blair||Downgrades||Outperform||Market Perform|
|Sep 2016||Cowen & Co.||Downgrades||Market Perform||Underperform|
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