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Refreshing Our Beverage Coverage

Two brewers get another look.

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We recently took another look at Boston Beer (SAM) and Molson Coors (TAP), which resulted in a large fair value estimate increase for one and a moat downgrade for the other.

We see Boston Beer as a stellar operator at the high end of malt beverages, despite meaningful competitive intensity. We’ve maintained our narrow economic moat rating, although our competitive outlook has both puts and takes. However, we’ve raised our fair value estimate to $431 per share from $244, primarily because of a reduction in our systematic risk rating and consequent discount rate to align with our global beverage coverage, as well as more robust top-line expectations. In our view, there is an adequate margin of safety in the shares at their current price, and we would advise investors looking for alcoholic beverage exposure to take a sip.

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Nicholas Johnson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.