NEW YORK (AP) â¿¿ An analyst at UBS Investment Research downgraded the stock of beer company Molson Coors Brewing Co., saying beer sales are declining.
Major beer makers have struggled recently because of high unemployment amongst young men in the U.S. In November, Molson Coors said that its third-quarter profit fell 23 percent due to high costs and unemployment among its core customers.
Analyst Kaumil Gajrawala on Tuesday downgraded Molson Coor's stock to "Neutral" from "Buy" and lowered the stock's price target by $1 to $45.
He said that even if employment trends improve, domestic beers like the company's Miller Lite brand are losing market share to specialty craft beer, imported beer and wine and spirits.Gajrawala lowered his profit predictions for Molson Coors for the next two years. He now expects earnings of $3.60 per share this year, down from a previous forecast of $3.69 per share; and of $3.81 per share next year, down from $3.96 per share. Analysts polled by FactSet expect earnings of $3.63 per share this year and $3.79 per share in 2013. Gajrawala said that Coors Light volumes grew for most of the past year, but turned negative in the past few months. Miller Lite sales, meanwhile, are declining, but Gajrawala said that a new Miller Lite advertising campaign could help the brand's market share. Coors Light became the second best-selling beer in the United States last year, surpassing Budweiser, according to trade publication Beer Marketer's Insights. Budweiser is made by Anheuser-Busch Inbev. Gajrawala said that spending on information technology will offset any of the company's cost savings. A Molson Coors spokesperson said that the company does not comment on analyst reports. Shares of Molson Coors fell $1.04, or 2.4 percent, to $42.96 in afternoon trading Tuesday.