Bank of America has re-rated Molson Coors to Underperform from Neutral following the company's fourth-quarter report and management's presentation at the Consumer Analyst Group of New York (CAGNY) conference. The brokerage reduced its price objective to $42 from $50, using an unchanged multiple of roughly 9 times its 2027 earnings estimate.
The firm described Molson Coors' fiscal 2026 guidance as weaker than anticipated and said management provided limited clarity on how U.S. beer volumes will stabilize. Bank of America flagged an elevated downside risk if the U.S. beer category endures another year of mid single-digit declines or if Molson Coors continues to cede market share.
Analysts at the brokerage emphasized the company's cost structure: with a high fixed cost base, shortfalls in volume have disproportionate effects on profitability. Bank of America quantified that sensitivity, estimating every 0.25% decrease in shipments lowers earnings per share by about $0.06.
Reflecting these concerns, the brokerage lowered its 2026 EPS estimate for the brewer to $4.62, a 15% decline year over year and positioned at the low end of Molson Coors' guidance range for an 11% to 15% earnings decline. The forecast assumes a 2.6% drop in U.S. beer industry volumes in 2026 - following a 5.6% decline in 2025 - and projects a 3.6% decrease in Molson Coors' U.S. consumption driven by continued share pressure.
Cost pressures are also incorporated into the updated view. Bank of America models cost of goods sold inflation of 4.4% per hectoliter, attributing the rise to higher aluminum prices, a detrimental mix effect and deleverage, as well as elevated incentive compensation.
The brokerage cut its 2027 EPS estimate to $4.70 from $5.68 and published an initial 2028 estimate of $4.75. While noting that network modernization initiatives have increased operational flexibility, Bank of America reiterated that volume risk remains the principal source of earnings volatility for the company.
Analyst note - The downgrade and model changes reflect a view that weakening volumes, continued share losses and cost inflation combine to reduce near-term earnings visibility for Molson Coors. Given the firm's fixed cost exposure, modest swings in shipments translate into material EPS movement.