Molson Coors (TAP) Continues Higher as UBS Makes It 'Top Pick'
Shares of Molson Coors Brewing (NYSE: TAP) are continuing higher today following a 7.5% rise yesterday. The stock felt a boost on the back of a UBS report released yesterday morning in which the firm named Molson Coors its "Top Pick". The firm maintained its Buy rating and $63 price target on Molson Coors.
The firm made Molson Coors its top pick based on:
- just by delivering the $500 million in cost savings Molson Coors has already guided to, it could grow EBIT by 20% over the next 3 years, assuming flat volume and pricing growth. At the same time, UBS believes that the $500 million in savings could be conservative and estimates that the cost savings could total $1 billion over 5 years.
- pricing appears to be sticking. The firm notes the October 1st price increase, pointing out that industry prices are up over 5%, while volumes are up over 3% through early November. Given these trends, UBS believes pricing should remain stable over the next several years.
- industry growth trends are improving. UBS specifically notes that recent data suggests that beer volume has begun to outpace both spirits and wine.
With shares of Molson Coors up 1.8% to $45.37 today, UBS's $63 price target represents potential price appreciation of about 39% from current levels.
Molson Coors Brewing Company, through its subsidiaries, produces and sells beer and other beverages.
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