Credit Suisse: A 'Unique Opportunity' Makes Molson Coors An Attractive Stock

Investors looking for a company that will see outsized benefits versus its peers from President Donald Trump's tax reform should consider Molson Coors Brewing Co TAP, according to Credit Suisse.

The Analyst

Credit Suisse's Laurent Grandet upgraded Molson Coors' stock from Neutral to Outperform with a price target boosted from $92 to $94.

The Thesis

Molson Coors has faced multiple issues over the past few years that hurt its prospects, including a lack of presences in the growth segments of the U.S. beer category like Mexican imports, craft, and flavored malt beverages, Grandet said in a note. The company likely identified its flaws and is launching multiple new brands, including Sol, Arnold Palmer Spiked, and Two Hats while making sure not to forget its core brands of Coors, Miller, Blue Moon and others.

Molson's strategy comes at an opportune time as the company will see a greater benefit from tax reform over its rivals, Grandet said. Specifically, brands like Budweiser and Heineken are owned by companies incorporated outside of the U.S. Meanwhile, Constellation Brands, Inc. STZ already boasts a very low tax rate from leveraging its Mexican subsidiary with gives investors a "unique opportunity" to invest in a company whose rivals won't see the same benefit.

Molson's management team has yet to quantify its tax savings or issue guidance, but the analyst's estimates suggest a 7 percentage point reduction in its tax rate to 20 percent. This should create a nearly $100 million windfall that can be used to support its brands and also pay down debt.

Price Action

Shares of Molson Coors Brewing were trading higher by more than 3 percent at $76.47.

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