Miller Lite brewer Molson Coors (TAP) rallied sharply on Thursday after the company delivered a strong earnings beat in the fourth quarter in spite of headwinds in the U.S. market.
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TAP rose 7% in premarket trading after Fiscal fourth quarter revenues defied gloomier expectations, falling just 2% to $2.74 billion versus the $2.71 billion expected on Wall Street. The company posted adjusted earnings per share of $1.30, above the consensus estimate of $1.13.
U.S. Struggles for TAP
Growth was driven by Europe, Asia and Canada, while the U.S. faced a more challenging macroeconomic environment, said the company, noting that domestic sales were also affected by the wind down of a contract brewing agreement.
“Amid a challenging macroeconomic environment, we continued to support the health of our brands globally and premiumize our business in several markets while developing plans for premiumization in the U.S. in 2025,” said CEO Gavin Hattersley.
Coors Light remained the number one light beer in the industry and again grew share of segment in the fourth quarter of 2024. Its Madri brand did well in the UK as the “premiumization” strategy yielded results, but the company said it is facing an “increasingly competitive environment” for its Carling brand there.
For 2025, TAP expects a “low single-digit increase” in revenues versus 2024 on a constant currency basis, and a “high single-digit increase” in underlying EPS growth.
TAP is Going ‘Beyond Beer’
Last month, TAP said it will expand its U.S. soft drinks business through a strategic partnership with UK-based Fever-Tree (GB:FEVR), a maker of premium sodas, tonics and other spirit mixers. Under the deal, since February 1st TAP has had exclusive commercialization rights to Fever-Tree’s lineup of tonics, ginger beers, colas and other cocktail mixers in the U.S.
It forms part of the brewer’s strategy to move “beyond beer” and into non-alcoholic drinks, including energy drinks.
Is TAP a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on TAP, based on five Buys, eight Holds and one Sell. The average TAP price target of $62.41 implies 16% upside from current levels, with the shares falling almost 10% in the last year.
