Citi lowers Molson Coors stock price target on sluggish sales and cautious outlook

On Wednesday, Citi lowered its price target Molson Coors (NYSE:) Beverage Company (NYSE:TAP) shares rose from $56.00 to $53.00 while a sell rating on the stock was reiterated. The change comes after the company reported first-quarter earnings, which showed better-than-expected earnings per share (EPS) of $0.95, beating the consensus estimate of $0.74.

Still, Molson Coors' recent sales numbers have been lackluster, with sales down 5.3% and volumes down 6.9% over the past two weeks, sending the company's stock down nearly 10%.

The beer giant confirmed it will maintain its full-year guidance for 2024, expecting sales to grow by a low-single-digit percentage on a constant-currency basis and basic earnings per share to grow by a mid-single-digit percentage. However, Citi expressed concerns about potential risks to these forecasts if negative single-digit percentage levels in underlying consumption persist.

The bank also pointed out that the positive impact of excess shipments in the first quarter (accounting for approximately 3.8% of the net excess shipments in the previous year) may be reversed in the second half of 2024.

Citi has lowered its 2024 earnings per share forecast for Molson Coors to $5.56. The company's stance remains cautious as it expects it may face challenges in maintaining revenue growth and profits after the first quarter. Those challenges include the benefits cycle from the Bud Light controversy, which Citi previously cited as a reason to downgrade the stock to a sell rating.

Investment Professional Insights

Join the analysis provided by Citi, investment expert Provides additional insight that may be crucial for investors considering Molson Coors Beverage Company. The company's determination to maintain its dividend payments, as evidenced by its 3.07% dividend yield and a remarkable 50-year track record of maintaining dividend payments, may be a reliable beacon for income-focused investors. This commitment is further underlined by the company's trailing 12-month dividend growth of 15.79% through the first quarter of 2023.

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In terms of valuation, Molson Coors has a lower P/E ratio, with an adjusted P/E ratio of 11.45, which may indicate that the stock is undervalued relative to its earnings. Additionally, the stock's price is hovering near its 52-week low, which combined with the strong free cash flow yield suggested by its valuation could provide a potential entry point for long-term investors.

However, it's worth noting that the company has faced challenges of late, as reflected in its sharp price declines over the past week and month. The short-term outlook may be affected by these trends, and a company's short-term debt exceeding its liquid assets may pose liquidity risks.

For those wishing to gain insight into Molson Coors' financial health and future prospects, investment expert provide additional investment expert tip Can guide investment decisions. There are currently 8 tips available, providing a nuanced view of a company's performance and potential.To access these insights and more, use the coupon code PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount.

This article was generated with the support of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.

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