On Thursday, Piper Sandler adjusted its financial outlook for Boston Beer Company (NYSE:SAM), reducing the price target to $230 from the previous $240, while keeping a Neutral rating on the stock. The revision reflects concerns over the impact of potential aluminum tariffs on the company’s costs. According to InvestingPro data, Boston Beer maintains strong financial health with a current ratio of 1.8 and more cash than debt on its balance sheet, though the stock currently trades at a relatively high P/E ratio of 47.5x.
The firm’s analysts have updated their model for Boston Beer to incorporate the risk associated with the additional costs of aluminum tariffs, which had not been previously factored into their estimates. They highlighted that approximately 93% of Boston Beer’s sales come from canned beverages, which could be significantly affected by these tariffs. With annual revenue of $2.01 billion and a gross profit margin of 44.4%, the company’s profitability metrics will be closely monitored for tariff impacts.
The analysts provided a breakdown of the cost of goods sold (COGS) for most food and beverage companies, estimating that it is usually divided evenly between ingredients, packaging, and processing/depreciation and amortization (D&A). They applied a similar cost structure to Boston Beer, assuming that only a third of the packaging cost per can is attributed to aluminum.
Due to the potential tariffs, Piper Sandler anticipates a roughly 9% annualized hit to Boston Beer’s earnings per share (EPS), particularly because the company has lower margins and less capacity to absorb additional costs. However, they also expect some offsets to this headwind.
Consequently, Piper Sandler has revised its EPS estimates for Boston Beer, lowering the 2025 forecast from $9.50 to $8.95 and the 2026 projection from $12.00 to $11.35. The price target adjustment to $230 is based on an unchanged multiple of 20 times the estimated 2026 EPS. This change in financial projections reflects the firm’s cautious stance on the impact of aluminum tariffs on Boston Beer’s future profitability. InvestingPro’s Fair Value analysis suggests the stock may be undervalued at current levels, with additional insights available in the comprehensive Pro Research Report, which provides detailed analysis of Boston Beer’s financial health, valuation metrics, and growth prospects.
In other recent news, Boston Beer Company has announced a strategic initiative to repurchase up to $50 million of its Class A Common Stock, as disclosed in a filing with the Securities and Exchange Commission. This move is often interpreted as a sign of confidence in the company’s stock and can potentially increase earnings per share by reducing the number of outstanding shares. Meanwhile, several analyst firms have adjusted their price targets for Boston Beer shares. Bernstein SocGen reduced its target to $275, citing challenges such as increased advertising expenses and a higher-than-expected tax rate, while maintaining a Market Perform rating.
Piper Sandler also lowered its target to $240, pointing to sluggish momentum despite some promising product launches and increased marketing efforts. Evercore ISI adjusted its price target to $275, highlighting industry challenges and maintaining an In Line rating. Citi revised its target to $265 following a wider-than-expected fourth-quarter loss for fiscal year 2024, while noting some positive trends in sales metrics. These recent developments reflect ongoing evaluations of Boston Beer’s financial performance and market strategies by various analyst firms.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.