Deutsche Bank upgraded Molson Coors (NYSE:TAP) Beverage Co.'s stock from sell to hold on Friday. The upgrade triggered a 2.5% increase in the beverage company's stock value. The bank stated that the risks concerning Molson's growth sustainability have already been accounted for in its current valuation.
This upgrade came on the heels of Molson's strong Q3 earnings and an increased guidance due to market share gains that resulted from a disruption in Bud Light's operations. However, the company's full-year guidance hinted at a softer Q4, which had previously led to a dip in stock value. Molson attributed this expected softness to planned brewery maintenance and an intention to end the year with healthy inventory levels.
Despite previous concerns about inflation, the U.S beer market surpassed expectations with a smaller drop in sales than anticipated. Deutsche Bank praised Molson's efforts in portfolio optimization, targeted marketing spending, and supply chain modernization. These efforts resulted in shelf-space gains of 6%-7% for Coors and Miller late this fall.
Deutsche Bank also revised its EBITDA estimate for 2023 upwards to $2.407 billion and anticipates a 9.6% organic revenue growth for Molson Coors. Additionally, the bank increased its gross-margin estimates for the beverage company to 38.0%. These gains are expected to maintain some of Molson's recent momentum into next year.
In addition to these adjustments, Deutsche Bank revised its stock-price target for Molson Coors to $58, which is slightly below the company's current price of $59.21.
InvestingPro Insights
Drawing upon real-time data from InvestingPro, Molson Coors Beverage Co. has a market cap of $12.79 billion and a P/E ratio of 54.91, implying a high earnings multiple. However, the adjusted P/E ratio for the last twelve months as of Q2 2023 is more moderate at 23.34. The company also demonstrated a revenue growth of 5.67% in the same period.
Adding to the analysis, a couple of InvestingPro Tips provide further insights. Firstly, Molson Coors' revenue growth has been accelerating, aligning with Deutsche Bank's anticipation of a 9.6% organic revenue growth. Secondly, the company's strong earnings should allow management to continue their impressive streak of dividend payments, which have been maintained for 49 consecutive years.
For further insights and additional tips, readers can delve into the extensive InvestingPro platform which offers a total of 9 tips for Molson Coors Beverage Co., each providing valuable information for potential investors.
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