The recent controversy stemming from Anheuser Busch InBev (NYSE:BUD) and its move to incorporate somewhat untraditional elements into its advertising—and stem the massive outcry and boycott that followed—has left room for opportunity in the sector. Hedgeye has spotted a likely winner in this struggle, and that’s Molson Coors (NYSE:TAP). Molson Coors slipped slightly in Wednesday afternoon’s trading despite Hedgeye’s new optimism over the brewer.
Hedgeye has high hopes for Molson Coors, which it calls the “key beneficiary” of InBev’s “historic marketing fiasco of its own doing.” In fact, Hedgeye now calls Molson Coors a new long idea, suggesting a potential upside as high as 30%. Hedgeye further noted that current earnings per share estimates are well ahead of consensus, and there’s a clear path forward for Molson Coors to capitalize on the gains and get farther—and more permanently—ahead. However, there are some potential downsides afoot.
A new partnership with Philadelphia Union makes Coors Light the “Official and Exclusive Domestic Beer Partner of the Philadelphia Union and Subaru Park.” That’s great, but it may put a strain on available supplies, a point likely exacerbated by potential shortages for the upcoming Memorial Day holiday. And with Molson Coors facing its own backlash over its recent advertising that featured comedian Ilana Glazer detailing how women first brewed beer, Molson Coors may have shot its own ascendancy in the foot before it even happened.
Analysts, meanwhile, are divided on Molson Coors’ likely fate. With four Buy, eight Hold, and two Sell ratings, Molson Coors stock is considered a Hold by analyst consensus. Moreover, with an average price target of $63.64, it offers only limited upside potential.
