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Investing.com - BofA Securities downgraded Molson Coors (NYSE:TAP) stock rating from Buy to Neutral on Friday, while reducing its price target to $50.00 from $65.00. The stock, currently trading at $47.24, is near its 52-week low of $47.05 and appears undervalued according to InvestingPro analysis.
The downgrade comes as the U.S. beer industry continues to experience volume declines exceeding historical trends, contrary to BofA’s earlier expectations when it upgraded the stock in December.
BofA Securities noted that Molson Coors has failed to stabilize its market share as anticipated, undermining the firm’s previous thesis that stable revenues would support margins and enable the stock to better discount cash flows.
The new $50 price target is based on 8.3x BofA’s fiscal year 2026 earnings per share estimate, down from the previous multiple of 9.9x, bringing the valuation more in line with U.S. packaged food industry peers.
BofA Securities explained the rationale for the comparable valuation by pointing out that the growth dynamics in the U.S. packaged food industry are similar to what Molson Coors is currently experiencing.
In other recent news, Molson Coors has reported its first-quarter earnings for 2025, revealing a significant decline in both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $0.50, which was below the anticipated $0.83, and revenue fell short at $2.3 billion against a forecast of $2.42 billion. Following these results, several analyst firms have adjusted their price targets for Molson Coors. Piper Sandler lowered its price target to $53, citing slowing retail momentum and rising aluminum prices as factors affecting the company’s performance. UBS also reduced its price target to $59 due to weaker-than-expected organic sales growth and softer margins, while Citi adjusted its target to $56, following a steeper-than-expected decline in local currency sales.
Evercore ISI revised its target to $60, maintaining an Outperform rating despite the weaker-than-anticipated first-quarter results. The company has also revised its full-year guidance, now expecting low single-digit declines in net sales and pretax income. Analysts from these firms have pointed out macroeconomic pressures and changes in consumer behavior as contributing factors to the company’s challenges. Molson Coors is facing a competitive and changing market landscape, with pressures on the U.S. beer category and increased investment from competitors like Anheuser-Busch InBev (EBR:ABI). Despite these challenges, the company is focusing on its core brands and expansion into non-alcoholic beverages as part of its strategy moving forward.
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