Bank of America has downgraded Molson Coors Beverage Co (NYSE:TAP) to ‘Underperform’ from ‘Neutral’ and lowered its price target to $42 from $50, following the company's fourth quarter 2025 results and its presentation at the recent CAGNY conference.
"Our downgrade reflects rising downside risk to forward estimates should the US beer category experience another year of mid‑single‑digit declines or TAP's consumption trend meaningfully underperform the category,” the analysts wrote.
Shares of Molson Coors slid on the bank’s downgrade, down 3.7% at about $48.
Bank of America’s analysts noted that TAP’s 2026 outlook was weaker than expected and offered limited visibility into stabilizing volumes. They also highlighted the sensitivity of earnings to volume shortfalls, estimating that "every -0.25% decline in shipments drives roughly $0.06 of earnings per share (EPS) reduction."
Bank of America lowered its 2026 EPS estimate to $4.62, down 15% year-over-year and at the lower end of TAP’s guidance range of an 11% to 15% decline. The revision reflects expected US beer industry declines of 2.6% and continued share pressure for TAP, as well as higher cost pressures including aluminum inflation and incremental incentive compensation.
Looking further ahead, the firm lowered its 2027 EPS estimate to $4.70 from $5.68 and introduced a 2028 EPS estimate of $4.75. The new $42 price target is based on roughly nine times 2027 expected EPS, reflecting weak industry dynamics and ongoing share losses.
The analysts added that while TAP’s network modernization efforts have improved operational flexibility, "volume risk remains the dominant driver of earnings volatility."
The analysts also noted potential upside risks, including moderation in US beer declines, TAP consumption tracking industry trends, a more favorable cost environment, better-than-expected deleverage impact, and a potential market rotation toward value stocks that could benefit TAP.