Molson Coors On Track To Outperform Beer Peers, Susquehanna Says

Although shares of Molson Coors Brewing Co TAP have lost 8 percent in the last three months, the stock has outperformed other beer stocks. The company’s shares are now trading below tobacco stocks and its valuation appears attractive, according to Susquehanna.

The Analyst

Analyst Pablo Zuanic maintains a Positive rating on Molson Coors and reduced the price target from $79 to $71.

The Thesis

Molson Coors’ U.S. volumes continue to lag the industry and Anheuser Busch Inbev NV BUD, Zuanic said in a Monday note.

Coors Light gaining share from Bud Light will not be enough, as the light segment is continuing to lose share to the large number of emerging alternatives, the analyst said.

Despite these factors, Molson Coors has more aggressive profit margin expansion, EPS and FCF targets for 2019, which could help its stock narrow the valuation gap, in Susquehanna's view.

Molson Coors' outperformance versus other brewery stocks seems like “a sign of sentiment starting to turn,” Zuanic said.

While volume is unlikely to be a catalyst, commentary from Molson on cost savings and synergies could lend upside, he said.

Price Action

Molson Coors shares were down 0.23 percent at $59.57 at the time of publication Monday.

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