Boston Beer Cut to Sector Perform at RBC as Volumes Are Yet to Bottom

2022.07.07 17:17

Boston Beer (SAM) Cut to Sector Perform at RBC as Volumes Are Yet to Bottom

RBC Capital Markets analyst Nik Modi downgraded shares of The Boston Beer Company (NYSE:SAM) to Sector Perform from Outperform with a price target of $331.00 per share, down from $488.00.

Again, Seltzer Trends is the core problem for Boston Beer.

“Truly’s share of hard seltzer has also regressed in the last 4 weeks and the overall hard seltzer category continues to lose share of overall beer. For SAM, we see the pressure on their largest brand Truly (~50% of sales) being too much to overcome in the near term,” Modi told clients in a note.

The analyst moved to the sidelines as he believes the company’s volumes have not a bottom just yet. Along these lines, Modi expects SAM to cut guidance once again.

“Last quarter we believed there was mounting pressure on SAM’s guidance due to hard seltzer weakness, overall beer weakness early in the year, and mounting pressures on the consumer. Since then, the hard seltzer category and Truly have continued to slow and are hampering overall SAM growth,” Modi added.

Although the analyst acknowledges that FY22 EPS estimates have already come down 4%, he still sees downside risk to the current numbers.

SAM shares are down over 0.5% in pre-open Thursday.