Market Overview

The Trend Isn't Your Friend; Sell Molson Coors

Share:
The Trend Isn't Your Friend; Sell Molson Coors
Related TAP
A Nation Of Shrinking Drinkers: Who Wins And Who Loses As Booze Sectors Contract
Benzinga's Top Upgrades, Downgrades For September 13, 2017

The Canadian beer market, much like the American beer market, is seeing a growth in craft products at the expense of established players. And one of the biggest established beer makers in Canada is Molson Coors Brewing Co (NYSE: TAP), Bereneberg's Javier Gonzalez Lastra and Matt Reid commented in an initiation note.

Molson is the second biggest beer company in Canada, with a 30-percent market share, but the company's two key brands, Coors Light and Molson Canadian, account for half of the company's total sales within the "structurally challenged category of premium light," the analysts wrote. As a whole, 75 percent of the company's profits are coming from challenged categories, including economy beer.

Accordingly, the firm initiates coverage of Molson's stock with a Sell rating and $78 price target.

Looking forward Molson needs to focus on running its operations more efficiently and generate sufficient cash to pay down its debt load and do so while avoiding declines in volume and sales, the analysts continued. Naturally, this will be difficult to accomplish as the beer market becomes even more fragmented over time which could result in a decision to "change the playbook," including aggressive pricing increases.

"We remain unconvinced, and even see more downside than upside risks to earnings forecasts in the medium term," the analysts added.

Related Links:

Cultural Democracy: The 7 Best And Worst Beers According To The Layman's Palate

This BUD's For You; Argus Goes Bullish For Anheuser Busch
________
Image Credit: By Chris T Cooper (CT Cooper) (Own work) [Public domain], via Wikimedia Commons

Latest Ratings for TAP

DateFirmActionFromTo
Sep 2017BerenbergInitiates Coverage OnSell
Aug 2017Credit SuisseMaintainsNeutral
May 2017Societe GeneraleDowngradesBuyHold

View More Analyst Ratings for TAP
View the Latest Analyst Ratings

Posted-In: Analyst Color Short Ideas Price Target Commodities Initiation Top Stories Markets Analyst Ratings Best of Benzinga

 

Related Articles (TAP)

View Comments and Join the Discussion!
Loading...
Loading...