Nomura Securities Upgrades Molson Coors (TAP) to Buy; Lower Gas Prices Means More Beer Drinking

Nomura Securities analyst Ian Shackleton upgraded Molson Coors (NYSE: TAP) from Neutral to Buy Thursday and raised his price target to $85.00 (from $70.00). The analyst cited improving U.S. beer market dynamics and a higher focus on cash.

Shackleton sees an improving U.S. beer market as sales benefit from lower gas prices. "We believe that this will move
the total market from c-1% pa on volumes to +1%," he said.

In addition, cost cutting in Canada will continue to support the company's EPS estimates.

On speculation of a MillerCoors buyout on a bid by ABI for SABMiller, the analyst said he is skeptical. That said, the firm views Molson Coors as a good hedge to capitalize on the brewing M&A theme. In absence of a deal, the company could start a share buyback plan in 2015, would would further enhance EPS. A buyback plan of $700 million, for instance, could add 3-4% to EPS, the analyst estimates.

For an analyst ratings summary and ratings history on Molson Coors click here. For more ratings news on Molson Coors click here.

Shares of Molson Coors closed at $75.40 yesterday.

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