By Tonya Garcia, MarketWatch
JPMorgan analysts note that Molson Coors is expanding the production capacity for Blue Moon LightSky and seltzers by 400% each, but they’re still concerned it’s not enough.
“As we believe hard seltzers will continue to grow at a fast pace and other players are also adding production capacity, we believe this target puts Molson Coors under tremendous pressure to deliver against this goal even when considering the three brands,” JPMorgan said.
“Management’s effort to launch on-trend hard seltzer brands is helpful, but still relatively small to really move the needle, and therefore we think it is prudent to remain on the sidelines at present.”
JPMorgan rates Molson Coors stock neutral with a $40 price target.
MKM Partners is more upbeat.
“Where most staples companies have received a pass for COVID-19 related disruption, Molson Coors valuation has been unduly punished,” analysts said. “Results aren’t far off peers, yet Molson Coors is near its 52-week low.”
Molson Coors stock has slumped 28.8% over the past year while the SPDR Consumer Staples Select Sector exchange-traded fund /zigman2/quotes/200697959/composite XLP -0.25% has gained 3.3% and the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.14% is up 8% for the period.
MKM points out a number of factors in Molson Coors’ favor, including Miller Lite and Coors Light outperforming Anheuser-Busch’s /zigman2/quotes/209225053/composite BUD +1.48% Bud Light and the company’s innovative lineup, including hard seltzers.
“COVID-19 disruption has concealed the improvements Molson Coors has made, but over time should become more obvious,” MKM said.
MKM rates Molson Coors stock buy with a $55 price target.