Analyst Note| Nicholas Johnson, CFA |
Shares of no-moat Molson Coors have fared the worst of its brewing peer group, missing out entirely on the post-March rally (in fact, shares are trading a smidge below where they were back then). With COVID-19 cases rising across Europe and the U.S., we believe investors were bracing for the worst heading into its third-quarter release. The results were good (ahead of CapIQ consensus on both the top and bottom lines), but the market remains wary nevertheless (shares barely moved on the news). We’re not changing our $55 fair value estimate, and our view is that the stock has been bid down to obscenely cheap levels, implying worse-than-mediocre long-term outcomes. While the turnaround will take time, we remain adamant that the story is not a hopeless one.