On Monday, JPMorgan adjusted its outlook for Molson Coors (NYSE:TAP) Beverage Company (NYSE:TAP) shares, reducing the price target to $54 from the previous $60, while maintaining a Neutral rating on the stock. The firm anticipates the beverage company to announce its second-quarter earnings for 2024 on Tuesday, August 6, before the market opens.
The adjustment in the price target comes as JPMorgan revised its earnings per share (EPS) estimate for the second quarter to $1.63, a slight decrease from the earlier forecast of $1.67. This revision represents a 2% reduction and stands below the current Bloomberg consensus of $1.71.
Despite the change in quarterly estimates, JPMorgan's full-year EPS forecast for 2024 remains at $5.65, which reflects a 4.2% year-over-year increase and is closely aligned with the consensus estimate of $5.66 and the company's own guidance for mid-single-digit percentage growth.
JPMorgan's analysts have also modified their organic sales growth (OSG) projections for Molson Coors, now expecting a 2.8% decline for the second quarter and a modest 0.8% increase for the full year of 2024.
These figures contrast with previous estimates of -1.6% and +1.2%, respectively, and are slightly more pessimistic than the current Consensus Metrix consensus of -1.2% and +0.9%. The company's guidance for 2024 suggests low-single-digit percentage growth.
The rationale behind the lowered OSG outlook is attributed to weaker than expected volume performance in the Americas, driven by a combination of general industry softness and challenging comparisons for key brands such as Coors Light and Miller Lite.
Looking further ahead, JPMorgan has established a December 2025 price target for Molson Coors, applying an 8.6 times price-to-earnings (P/E) ratio—consistent with the current 2025 multiple—to their 2026 EPS forecast. This approach suggests that the current market trends are unlikely to support a re-rating to a more attractive multiple in the near term.
In other recent news, Molson Coors has been the subject of several recent developments. The beverage company reported strong growth in its first quarter, with a 10% increase in net sales revenue and a nearly 69% rise in pre-tax income. Core brands like Coors Light, Coors Banquet, and Miller Lite saw double-digit volume growth, suggesting potential for future expansion.
However, Edward Jones has maintained its Hold rating on Molson Coors stock, citing the company's current valuation and performance relative to its industry peers. The firm's analysis suggests a balance between modest growth expectations for Molson Coors' core business and the potential for future growth through increased investment.
On a different note, Citi has lowered its price target on Molson Coors shares from $56.00 to $53.00, while maintaining a Sell rating. This decision follows the company's recent sales downturn and a cautious outlook, despite a higher-than-expected earnings per share of $0.95 in the first quarter.
These recent developments reflect the challenges and opportunities Molson Coors faces in the competitive beverage industry. The company remains confident in achieving top and bottom line growth in 2024, while analysts from Edward Jones and Citi offer differing perspectives on the company's valuation and future performance.
InvestingPro Insights
As Molson Coors Beverage Company (NYSE:TAP) prepares to release its second-quarter earnings, investors are closely monitoring the company's performance metrics. According to real-time data from InvestingPro, Molson Coors is trading at a low earnings multiple with a current P/E ratio of 12.4, which further adjusts to 9.13 when considering the last twelve months as of Q1 2024. This indicates that the stock could be undervalued relative to its earnings, potentially offering an attractive entry point for value investors. Adding to the company's appeal is a high shareholder yield and a history of dividend reliability, as Molson Coors has raised its dividend for 3 consecutive years and maintained dividend payments for 50 consecutive years.
Despite recent price declines, with the stock trading near its 52-week low and experiencing a 20.23% drop over the last three months, analysts predict the company will be profitable this year. This is supported by a robust dividend yield of 3.43% as of June 2024, which is bolstered by a 7.32% dividend growth rate in the last twelve months as of Q1 2024. The InvestingPro platform offers additional insights and metrics for investors seeking deeper analysis, including PRONEWS24 which grants up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
For those interested in exploring further, there are 10 additional InvestingPro Tips available for Molson Coors, providing a comprehensive outlook on the company's financial health and stock performance. These tips, along with detailed analysis, can be found on the InvestingPro platform.
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