Valued at a market cap of $11 billion, Molson Coors Beverage Company (TAP) manufactures, markets, and sells beer and other malt beverage products under various brands. The Golden, Colorado-based company offers flavored malt beverages, including hard seltzers, craft, spirits and, energy, and ready-to-drink beverages.
Shares of this drink and brewing company have significantly lagged behind the broader market over the past 52 weeks. TAP has declined 13.9% over this time frame, while the broader S&P 500 Index ($SPX) has soared 20.5%. Moreover, on a YTD basis, the stock is down 6.8%, compared to SPX’s 2.9% rise.
Narrowing the focus, TAP has also lagged behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 9.4% return over the past 52 weeks and 2.5% gain on a YTD basis.
On Nov. 7, TAP shares saw a slight gain following its mixed Q3 earnings report. The company’s adjusted earnings of $1.80 per share declined 6.2% from the year-ago quarter but exceeded the consensus estimates by a notable 9.1%. However, its revenue declined 7.9% year-over-year to $3 billion and missed Wall Street’s expectations by 3%.
The top-line miss was primarily driven by a 12.3% drop in financial volumes, caused by lower shipments and reduced contract brewing volumes in the Americas, as the U.S. macroeconomic environment remained challenging.
Despite these headwinds, Molson Coors reaffirmed its 2024 underlying EBT outlook, citing expected cost improvements in packaging materials, transportation, and administrative expenses. This may have provided some support to investor sentiments. However, the company revised its 2024 sales forecast to a 1% decline on a constant-currency basis from the previously mentioned low-single-digit growth.
For the fiscal year, which ended in December, analysts expect TAP’s EPS to grow 6.6% year over year to $5.79. The company’s earnings surprise history is promising. It beat the Wall Street estimates in each of the last four quarters.
Among the 20 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on five “Strong Buy,” one “Moderate Buy,” 13 “Hold,” and one “Strong Sell” rating.
This configuration is slightly more bullish than three months ago, with four analysts suggesting a “Strong Buy” rating.
On Feb. 5, Citi analyst Filippo Falorni upgraded TAP’s rating to “Neutral” and raised its price target to $57, which indicates a 6.7% potential upside from the current levels.
The mean price target of $62.23 represents a 16.4% upside from Molson Coors’ current price levels, while the Street-high price target of $75 suggests an upside potential of 40.3%.
