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Molson Coors stock fell after reporting earnings. The Bud Light boost was not big enough.
Darryl Dyck/Bloomberg
Talk about a hangover:
Molson Coors
Beverage Co. is falling despite reporting strong results on Tuesday. That’s a sign that expectations may have been too high for one of the big beneficiaries of the Bud Light controversy.
Molson Coors (ticker: TAP) reported second-quarter earnings of $1.78 a share on Tuesday, on revenue that rose nearly 12% year over year to $3.27 billion. Analysts were looking for earnings of $1.64 a share on revenue of $3.29 billion.
For the full year, the company said it expects sales to grow at a high single-digit rate, compared with 2022, up from its prior forecast for a low single-digit increase.
That all sounds like good news, but Molson Coors shares are down nearly 4% in recent trading to $67.12 in afternoon trading; at one point it was on pace for its largest percentage decline in nearly a year. Blame the buzz around Bud Light alternatives.
Recall that some analysts and investors have grown increasingly bullish on Molson Coors, given that its Miller Lite and Coors Light brands have seen sales climb and their market shares expand. Those gains have come at the expense of
Anheuser-Busch InBev
’s
(BUD) Bud Light brand, which many conservative consumers pledged to boycott after its partnership with transgender influencer Dylan Mulvaney, a situation worsened by some AB InBev management reactions.
“Given the Bud Light controversy, the bar was incredibly high, and the stock needed a ‘wow’ factor today,” writes Wells Fargo analyst Chris Carey, who has an Underweight rating and $64 price target on the shares. “We just didn’t get it.”
To wit, Molson Coors shares have jumped almost 29% since April 1, when the Bud Light backlash began, more than double the
S&P 500’s
gain over the same period. The rally left the shares trading hands for nearly 14 times forward, ahead of its five-year average of 12.4 times, a level that provides little wiggle room for anything but stellar results.
Nonetheless, bulls are quick to argue that the company’s ability to keep capitalizing on Bud Light’s missteps.
“Despite the large guidance raise, the new ranges still appear very conservative,” writes Roth MKM analyst Bill Kirk, who thinks the shares should trade to $75. He argues that even the new forecast “seems to not include forward benefits from current market share shifts.”
CFRA analyst Garrett Nelson made much the same argument as he kept an $80 price target on the shares, writing that despite the increase, Molson Coors’ “guidance is likely to prove conservative.”
Others think Molson Coors’ growing sales remain a show-me story; just four of the 19 analysts tracked by FactSet have a Buy rating or the equivalent on the shares.
Write to Teresa Rivas at [email protected]
Source: https://www.barrons.com/articles/bud-light-boycott-molson-coors-stock-price-earnings-b2bf716d?siteid=yhoof2&yptr=yahoo