Molson Coors Beverage's (TAP) weak Q1 results and cautious outlook are likely to weigh on investor sentiment in the near term despite its relatively low valuation, UBS said in a note Friday.
Molson Coors' shares fell after a weak Q1 and lower full-year guidance, the UBS analysts noted.
Sales dropped across key regions, including an 11.5% decline in the Americas and a 4.5% dip in EMEA and APAC, missing forecasts, the investment firm said.
Gross margin narrowed to 36.1%, down nearly 1 percentage point year-over-year, due to weak revenue and higher selling, general and admin expenses, UBS said.
SG&A costs were elevated, partly due to $30 million in transition costs tied to the Fevertree integration, which the company expects to recover later through sales, according to the note.
Net sales are also expected to decline slightly, compared to previous expectations of modest growth, UBS analysts noted.
UBS maintained a neutral rating for Molson Coors with a $63 price target.
Price: 54.95, Change: +0.69, Percent Change: +1.27
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