Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Boston Beer Downgraded to Sell at Goldman Sachs on Negative Risk/Reward

Published 06/28/2022, 05:35 AM
Updated 06/28/2022, 09:43 AM
© Reuters.  Boston Beer (SAM) Downgraded to Sell at Goldman Sachs on Negative Risk/Reward

© Reuters. Boston Beer (SAM) Downgraded to Sell at Goldman Sachs on Negative Risk/Reward

By Senad Karaahmetovic

Shares of Boston Beer Company (NYSE:SAM) are down 3.5% at the open today after Goldman Sachs analyst Bonnie Herzog slashed the rating to Sell from Neutral as he continues to see negative risk/reward.

The analyst is “incrementally more cautious” on Boston Beer following recent checks that showed that Truly’s momentum has decelerated further. The deceleration has been fueled by the “broader slowdown in the hard seltzer category, cycling of tough comps, and an overall weaker pipeline of innovation.”

“Distributor expectations for Truly and the broader hard seltzer category is a concern given they expect sales for Truly/the hard seltzer category to be down 12%/8% in 2022 and down 2%/1% in 2023, suggesting that Truly’s momentum is slowing (consistent with recent Nielsen data). Furthermore, >60% of distributors indicated that Truly has been allocated less, or a lot less, shelf space at retail in 2022,” Herzog wrote in a client note.

As a result, the analyst is pessimistic that the company may deliver on its FY22 shipment/depletion growth guidance of 4-10% this year. Goldman projects Truly FY22 shipments will drop by roughly 22%.

“Furthermore, we see incremental downside risk to SAM’s gross margins due to volume deleverage and believe mgmt’s FY22 gross margin guidance of 45-48% will also need to be lowered,” Herzog concluded.

The price target is cut by 16% to $318.00 per share.

At the same time, Herzog upgraded Molson Coors Beverage (NYSE:TAP) to Neutral from Sell and reiterated a Buy rating on Constellation Brands (NYSE:STZ).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.