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Coors Light
Molson Coors shares lost up to 3.5% after Bank of America Merrill Lynch hit the brewing company with a double downgrade and a reduction in the price target.
The bank changed its "buy" rating to "underperform", citing concerns about the lagging growth of the US beer industry and the Molson Coors bond to spend more to maintain its market share of key brands. Its revised price target increased from $ 70 per share to $ 50, a reduction of 28.6%. Molson Coors shares traded at $ 52.96 per share at 11:00 am ET.
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The badyst's note indicated that although the acquisition of MillerCoors and Miller International in 2016 by the company was well managed in terms of cash flow, late sales and interest weakened for American beer should worry investors.
"After the acquisition, the growth of the beer industry in the United States (and more generally food and beverage) has become more expensive. This has prompted many companies to reduce their profit ambitions to boost growth, "said BAML badysts Bryan Spillane, Christian Junquera and Peter Galbo.
The note indicates that the beer company is threatened by the migration, which has lasted for a decade, from economic beers to high-end brands. Molson Coors is less exposed to the high-end beer segment than its major competitors, AB InBev and Heineken, and the bank expects a decline in volume as the trend continues.
The brewer is also increasingly threatened by alcoholic beverages without beer. The sub-segment "Beyond beer", which includes products such as hard-boiled seltzer and canned wine, has also expanded, which is more damaging to the industry. national light beer.
"We see increased potential for TAP to increase its spending in order to stabilize its market share on core brands and accelerate its investment in premium /" beyond "beer segments over the next year. In our opinion, this could dampen earnings growth in fiscal years 19 and 20, "badysts said.
According to Bloomberg data, Molson Coors currently has 8 "buy" ratings, 10 "hold" ratings and 3 "sell" ratings. The consensus target of the stock price is $ 64.06 per share.
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