Analyst Note| Nicholas Johnson, CFA |
Investor expectations were undoubtedly tempered heading into no-moat Molson Coors’ first-quarter earnings print, as a backdrop of calamitous events pressured the stock in recent months. These included a nontrivial cybersecurity breach and the anomalous winter storm that disrupted much of its brewing infrastructure in Texas. Nevertheless, the results were generally in line with our expectations, and more importantly, laudable progress is being made against important commercial and operational initiatives. We plan to raise our fair value estimate to $64 from $60 to reflect time value as well modestly higher medium-term margins. As investors warm to the reality that the brewer is not a hopeless cause, shares are no longer obscenely cheap, but we still see solid upside from here.