Boston Beer Co. may soon have to lower its expectations for the year as its hard-seltzer business “deteriorates further,” Goldman Sachs analysts said Tuesday.
Analysts downgraded their rating on Boston Beer SAM,
-4,54%
stocks for sale, from the equivalent of holding, saying they see “an even greater negative risk/reward balance” for the hard-seltzer category.
Distributors are further reducing their hard salt inventory and Boston Beer’s Truly hard seltzer brand volume declines are accelerating, creating more wasted shelf space at retailers and contributing to continued margin pressures, the analysts, led by Bonnie Herzog, said in a note.
And Boston Beer’s Twisted Tea, the beverage maker’s “hard” iced tea launched last year, may not be enough, Goldman analysts said.
“While distributor sentiment around Twisted Tea was generally positive, with most pointing to significant future growth potential, we don’t believe Twisted Tea (or SAM’s other innovations) will be enough to offset Truly’s declines this year or next,” they said.
Boston Beer executives may have to lower guidance for fiscal 2022 in all areas, including gross margin and earnings per share guidance, Goldman analysts said.
Analysts lowered their 2022 EPS estimate by 27% to $9.78, once morest management forecasts of between $11 per share and $16 per share, and a FactSet consensus of $12.03.
Goldman analysts also lowered their price target on Boston Beer to $318, stable from Tuesday’s prices.
Boston Beer shares have lost 37% this year, compared to losses of around 16% for the S&P 500 index. SPX,
-1.98%
In the same note, Goldman Sachs analysts updated Molson Coors Beverage Co. TAP,
+0,52%
stock to neutral, saying they are more positive regarding the company given “some signs of stabilization” for its Miller Lite and Coors Light brands and fewer out-of-stock issues.
Molson Coors is also seen as a “defensive/value stock” that might benefit from lower consumer prices in a possible recession, analysts said. Molson Coors shares rose 20% for the year.