Topline
The mountains are green for Molson Coors investors as the Coors Light parent rides the ongoing wave of backlash against its chief competitor, Anheuser-Busch, and analysts predict the company’s shares may only surge further thanks to the recent uptick in demand.
Key Facts
The North American beer conglomerate is up some 28% since the end of March, compared to Bud Light parent Anheuser-Busch’s 18% crash during that period after it became entangled in a messy controversy over its marketing campaign with a transgender social media personality Dylan Mulvaney.
Molson Coors stock inched up 0.7% Thursday morning to $66.65, building on its $66.17 closing price Wednesday, which was its highest close since January 2019, though the stock slid slightly down to $66 by 12:30 ET.
The latest Molson Coors rally follows a stream of bullish analyst notes as Molson Coors captures a growing share of the American beer market thanks to Bud Light outflows.
Bank of America analyst Bryan Spillane upgraded Molson Coors from a sell to a buy in a Tuesday note to clients, citing the collapsing demand for Bud Light as the catalyst for Molson Coors to cash in on its broader reshuffling efforts in recent years and deeming Coors Light and Miller Light the “the main beneficiaries of the Bud Light controversy.”
Jefferies analyst Kevin Grundy raised his price target for Molson Coors to $75 Monday, implying 14% upside and forecasting the stock to hit its highest level in nearly six years.
The bank cited a survey it conducted among beer distributors that revealed 100% of retailer respondents said Bud Light backlash had a noticeable impact on sales at their stores, while about a third of distributors believe the drag on Bud Light sales will be permanent; Jefferies accordingly bumped its 2023 earnings estimate for Molson Coors by 4% due to the observed “longer duration of the Bud Light benefit.”
Big Number
23.9%. That was Molson Coors’ share of the American beer market in the four-week stretch ending May 20—an increase of 3.15 percentage points year-over-year, according to NielsenIQ data cited by Bank of America.
Key Background
Molson Coors is the second-largest beer brand in the U.S., trailing only Anheuser-Busch. Likely thanks to its established popularity in the light beer market, Molson Coors has by far benefited the most from Anheuser-Busch’s slip-up compared to other beer companies. Its nearly 30% stock gain since March 31 far outperforms returns from other top players like Corona parent Constellation Brands (up 8%), Samuel Adams parent Boston Beer (up 1%) and Heineken (down 6%). Molson Coors actually weathered a bout of “anti-woke” pushback of its own after some took issue with a March advertisement for Miller Light in which the company playfully slammed its past advertisements sexualizing women, though that has yet to noticeably drag on sales for the beer.
Contra
The anti-trans Bud Light boycott is likely just a “transitory” issue that will “fade with time,” says Jefferies, pointing to past temporary stock declines associated with unpopular ads at other companies, like Nike’s brief dip after it struck a marketing deal with former NFL quarterback and police brutality activist Colin Kapernick. In a similar vein, Bernstein said Tuesday it’s a good time to buy Anheuser-Busch stock due to its cheaper-than-normal valuation.
Anheuser-Busch Faces ‘Permanent’ 15% Decline In Bud Light Sales—But Now May Be ‘Attractive’ Time To Buy Stock (Forbes)
Anheuser-Busch Stock Enters Bear Territory Amid Anti-Trans Bud Light Backlash (Forbes)
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