Molson Coors Hurt By Fewer People Drinking Beer, Warns Analyst

Bank of America Securities analyst Bryan D. Spillane downgraded Molson Coors Beverage Company TAP from Buy to Neutral, lowering the price forecast from $65 to $50.

In December, the analyst upgraded Molson Coors, expecting U.S. beer volumes to return to normal 2025 trends and the company’s market share to stabilize, which would help sustain margins and support a higher valuation through better cash flow visibility.

However, that outlook hasn’t materialized, industry volumes continue to fall below historical levels, Molson Coors Beverage is still losing share, and the stock’s valuation reflects ongoing uncertainty.

Also Read: Non-Alcoholic Beer Sales Up 9% In 2024, Experts Predict It Will Be The Second-Largest Beer Category Worldwide In 2025

As a result, the analyst downgraded the stock and cut the price forecast, now based on 8.3x their fiscal year 2026 EPS forecast versus the previous 9.9x.

This valuation is now more in line with U.S. packaged food peers, which face similarly muted growth prospects.

The analyst drew a sharp comparison between the current U.S. beer market and Doug Ivester’s old analogy of “sheep, parasites, and wolves” once used for the soft drink industry.

In this view, spirits are the wolves, stealing share and now encroaching further with ready-to-drink offerings; energy drinks are the parasites, leveraging beer distribution to their advantage; and beer companies, like Molson Coors Beverage, are the sheep, losing ground as consumer interest wanes.

This competitive pressure, the analyst argues, makes it increasingly unlikely for Molson Coors Beverage to meet earlier expectations, prompting them to revise their 2025 industry volume forecast from a 1.0% decline to a sharper 4.0% drop.

The analyst cut their fiscal year 2025 and fiscal year 2026 EPS estimates for Molson Coors Beverage from $6.02/$6.55 to $5.70/$6.02, citing a softer-than-expected second quarter in the U.S. and a more cautious revenue outlook tied to ongoing weakness in the domestic beer market.

Price Action: TAP shares are trading higher by 0.55% to $47.50 at last check Friday.

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