Boston Beer shares target cut to $275 by Evercore ISI

Published 26/02/2025, 11:48
Boston Beer shares target cut to $275 by Evercore ISI

Wednesday, Evercore ISI adjusted its price target for Boston Beer Company (NYSE:SAM) shares, lowering it to $275 from the previous $300, while maintaining an In Line rating. The firm’s analysts cited the company’s fourth quarter performance, which aligned closely with Street expectations, and its strategies to bolster sales through increased advertising and promotional (A&P) spending.

Boston Beer’s management highlighted the current challenges within the beer industry, including changing consumer habits toward moderation, health concerns, and competition from marijuana and hemp-derived beverages, as well as GLP1s. Despite these headwinds, the company maintains strong fundamentals with a healthy gross profit margin of 43.95% and a solid current ratio of 2.03, indicating robust operational efficiency and liquidity. These factors could potentially lead to a decline in per annum alcohol consumption to around -1%, deviating from the historical growth rate of about +1%.

The analysts at Evercore ISI anticipate that Boston Beer’s stock will continue to be a point of contention among investors. The main discussions revolve around the company’s capability to expand gross margin percentages, enhance its Truly brand, and the extent of Twisted Tea’s slowdown.

Despite the reduced price target, the analysts have not changed their neutral stance on the stock, suggesting that they believe the company’s shares are currently valued appropriately in the market. The focus remains on Boston Beer’s ability to navigate the evolving market conditions and consumer preferences that are impacting the alcohol industry.

Investors are expected to watch closely how Boston Beer Company implements its strategies to address these industry-wide challenges and whether its efforts will translate into improved financial performance and shareholder value. For deeper insights into Boston Beer’s financial health and growth prospects, including additional ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro.

In other recent news, Boston Beer Company reported a significant miss in its fourth-quarter 2024 earnings per share (EPS), posting a loss of $1.68, which was below analyst expectations of -$1.24. Despite the EPS shortfall, the company recorded revenue of $402.3 million, surpassing the forecast of $392.52 million. Citi analyst Wendy Nicholson subsequently lowered the price target for Boston Beer shares to $265 from $290, maintaining a Neutral rating. This adjustment was influenced by the company’s wider-than-expected fourth-quarter loss and updated guidance for 2025, which projects an EPS range of $8 to $10.50, below the consensus estimate of $11.51.

Nicholson noted that Boston Beer’s depletions, a measure of distributor sales, remained flat, outperforming expectations of a decline, and shipments decreased by only 0.5%, better than anticipated. The company has set shipment and depletion expectations for 2025 ranging from a low single-digit decrease to a low single-digit increase. Additionally, Boston Beer plans to increase advertising spending by $30-$50 million to bolster its market position, focusing on product innovation and maintaining its market leadership in the hard tea segment. The company remains committed to its core brands and the national expansion of new products like Sun Cruiser, which is expected to drive future growth.

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