E-Malt.com News article: United States: Molson Coors added to a buy list as its February beer sales are forecast to be good

Despite a decline in the broader market, shares of Molson Coors Brewing Co. edged higher on March, 2 after an analyst said the brewer is poised to grow, The Associated Press reported on March, 3.

Goldman Sachs analyst Judy E. Hong added the Denver-based company to her "Americas Conviction Buy list." Her price target of $46 represents upside of 30 percent from the stock's February, 27 closing price of $35.23.

"Recent underperformance has created an attractive entry point to buy a solid beer company with double-digit earnings growth potential and a strong free cash flow profile," she wrote in a note to clients.

Last month the brewer reported a lower profit for its fourth quarter, saying higher beer prices weren't enough to protect it from the stronger dollar, high commodity costs and declining sales volumes of Miller Lite and other brands.

But Hong said overall beer sales will probably remain resilient as consumers trade down to the category from pricier spirits and wine.

The company is also likely to see profit growth from cost savings with its MillerCoors joint venture, a pairing with London-based SABMiller's U.S. unit to sell brands like Coors Light and Miller Lite.

Hong said although MillerCoors' sales to retailers dropped 2.3 percent in the three-month period ending in December. Furthermore, January sales to retailers appear to be up by a percentage in the low single digits, and February should be even better, she wrote.


04 March, 2009