NEW YORK (TheStreet) -- Shares of Molson Coors Brewing (TAP) closed higher by 2.15% to $74.54 on Thursday afternoon, after analysts at Morgan Stanley upgraded the stock to "overweight" from "equal weight" and set an $83 price target on the beer maker.
The firm said it raised its rating on the company that produces Coors Light due to a "compelling" risk/reward profile after the recent pullback in price, MarketWatch reports.
Morgan Stanley feels the consensus earnings per share estimate is now reasonable given recent downward revisions, and sentiment has become too negative.
"U.S. expectations are low, and a muted potential U.S. macro-driven recovery could now be more favorable than the market expects," Morgan Stanley said in an analyst note, MarketWatch added.
Separately, TheStreet Ratings team rates MOLSON COORS BREWING CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOLSON COORS BREWING CO (TAP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.40 is very weak and demonstrates a lack of ability to pay short-term obligations.
- 43.30% is the gross profit margin for MOLSON COORS BREWING CO which we consider to be strong. Regardless of TAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.58% trails the industry average.
- MOLSON COORS BREWING CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MOLSON COORS BREWING CO reported lower earnings of $2.75 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $2.75).
- TAP, with its decline in revenue, slightly underperformed the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 14.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: TAP Ratings Report