Molson Coors Beverage Co.’s stock experienced a 2.4% increase on Friday following a rating upgrade from Deutsche Bank. The bank upgraded the stock from “sell” to “hold” and expressed confidence that the risks associated with the company’s ability to sustain its current strong growth are adequately reflected in its valuation.
This upgrade comes after Molson posted third-quarter earnings that exceeded expectations and raised its guidance once again. The company continues to gain market share in light of the ongoing boycott of Bud Light. However, concerns arose regarding the fourth quarter, as the full-year guidance suggested some potential softness.
Molson noted that the U.S. beer market performed better than expected, with sales showing less decline compared to earlier in the year when consumer discretionary spending was hindered by inflation.
The company attributes its market-share gains to its revitalization plan and a revised marketing approach. These changes, according to Molson, position it favorably to capitalize on its growing presence in the market.
Molson Coors’ Shelf-Space Gains Expected to Continue into Next Year
Molson Coors, the multinational brewing company, is anticipated to maintain its recent momentum and growth in the coming year due to gains in shelf-space for its brands. Analysts predict that Coors and Miller will experience a 6% to 7% increase in shelf-space during the fall, with the potential for further gains in spring resets.
Despite these positive projections, Molson’s full-year guidance suggests weakness in the fourth quarter. The company attributes this to planned brewery maintenance, a decrease in pricing benefits, and a strategic decision to end the year with a healthy inventory position.
Although the provided guidance fell short of consensus, analysts remain confident in the company’s ability to maintain portfolio momentum and achieve growth. Deutsche Bank, one of the leading financial institutions, raised its estimate of Molson’s EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2023 to $2.407 billion from the previous value of $2.358 billion. The analysts expect the company’s organic revenue, excluding foreign-exchange effects, to increase by 9.6%, up from the previous forecast of 9.3%.
This optimistic outlook is based on expectations of over 9.3% growth in the Americas and more than 10.8% growth in Europe and the Asia-Pacific region. Deutsche Bank has also revised its gross-margin estimates to 38.0% from 37.7% previously.
The bank has adjusted its stock-price target to $58, slightly below the current stock price of $59.21. As of now, Molson Coors’ stock has shown a year-to-date gain of 15%, outperforming the S&P 500’s gain of 14%.