Citi has upgraded Molson Coors (TAP) to "Neutral" from "Sell," raising the target price to $57 from $47, based on a 9.5x multiple of the 2025 EPS estimate. This shift reflects the normalization of market share trends following the 2023 Bud Light controversy, which had temporarily boosted TAP's performance. The report highlights that TAP's market share trends have moved to -80 bps y/y over the last 10 months, with US volumes declining in a soft beer market. However, easier market share comparisons are expected in the spring, and the beer category will cycle easier comps in the summer, potentially stabilizing TAP's performance.
TAP has managed to protect its margins better than anticipated, despite volume declines, through cost savings and brewery efficiencies. The company's $2 billion share repurchase program is expected to support EPS growth, with Citi projecting high single-digit EPS growth in 2025. "From a margin point of view, a couple of things are going our way," TAP noted, emphasizing the benefits of exiting low-margin businesses and improving brewery efficiencies.
As of February 5, 2025, TAP was trading at $53.18, up 0.43% from the previous close.