Molson Coors Hurt By Fewer People Drinking Beer, Warns Analyst

Core Viewpoint - Bank of America Securities analyst downgraded Molson Coors Beverage Company from Buy to Neutral, lowering the price forecast from $65 to $50 due to ongoing challenges in the U.S. beer market [1][2] Company Summary - The analyst had previously upgraded Molson Coors, anticipating a return to normal beer volume trends by 2025 and stabilization of market share, which would support margins and cash flow visibility [1] - However, the expected recovery has not occurred, with industry volumes continuing to fall below historical levels and Molson Coors losing market share [2] - The stock's valuation now reflects ongoing uncertainty in the market [2] Valuation Adjustments - The price forecast was revised based on an 8.3x fiscal year 2026 EPS forecast, down from a previous 9.9x, aligning it more closely with U.S. packaged food peers facing similar growth challenges [3] - Fiscal year 2025 and 2026 EPS estimates were cut from $6.02/$6.55 to $5.70/$6.02 due to a weaker-than-expected second quarter and cautious revenue outlook [6] Market Dynamics - The competitive landscape is likened to a "sheep, parasites, and wolves" analogy, where spirits are seen as wolves taking market share, energy drinks as parasites leveraging beer distribution, and beer companies like Molson Coors as sheep losing ground [4] - The analyst revised the 2025 industry volume forecast from a 1.0% decline to a sharper 4.0% drop, reflecting increased competitive pressure [5]