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On Friday, Bernstein SocGen Group maintained a Market Perform rating on Boston Beer Company (NYSE:SAM) shares but reduced the price target from $315.00 to $275.00. With the stock currently trading at $237.50, InvestingPro analysis suggests the company is currently undervalued, though it’s trading at a relatively high P/E ratio of 46.5x earnings. The adjustment follows the company’s financial report, which indicated a shipment decline of 2.4% and a price-mix growth of 2.6%, leading to a net sales growth of 0.2% for F24. This performance was slightly better than both Bernstein SocGen’s expectations and the consensus, with fourth-quarter shipment growth not as poor as anticipated.
The company’s recent financial results exceeded projections on an adjusted basis across the profit and loss statement. Boston Beer maintains a strong financial position, with a healthy current ratio of 1.8 and minimal leverage with a debt-to-equity ratio of just 0.04. Additionally, depletions up to February 21st were flat, an improvement compared to the 3.7% decline seen up to February 22nd in the previous year, according to the latest Nielsen scanner data. Topline guidance from Boston Beer was generally in line with market expectations, and the company offered a slightly more positive outlook on gross margin guidance.
Despite some positive indicators, Boston Beer faces challenges for F25, including a projected increase in advertising, promotion, and selling expenses by $30 million to $50 million, not accounting for any changes in freight costs. Furthermore, the company has forecasted an effective tax rate of 29% to 30%, which is higher than initial expectations from both Bernstein SocGen and consensus. Consequently, earnings per share (EPS) guidance for F25 is set at $8.00 to $10.50, falling below the consensus expectation of $11.51 and Bernstein SocGen’s estimate of $11.22.
In light of these headwinds, Bernstein SocGen has revised its EPS estimates downward by approximately 10%. The firm’s analyst, Nadine Sarwat, expressed difficulty in having strong conviction on Boston Beer’s potential for significant movement in either direction without speculating. The new price target reflects these concerns and adjustments to the firm’s expectations. InvestingPro data reveals that six analysts have recently revised their earnings downward for the upcoming period, though net income is still expected to grow this year. For deeper insights into Boston Beer’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, along with 10+ additional ProTips and advanced metrics.
In other recent news, Boston Beer Company reported its fourth-quarter 2024 earnings, revealing a significant miss in earnings per share (EPS), which came in at -$1.68 compared to the expected -$1.24. However, the company’s revenue slightly exceeded forecasts, reaching $402.3 million against a prediction of $392.52 million. Piper Sandler has adjusted its earnings per share estimates for Boston Beer, lowering the 2025 expectation from $11.35 to $9.50 and the 2026 forecast from $13.75 to $12.00, while also reducing the stock price target to $240. Evercore ISI also revised its price target for the company, reducing it to $275 from the previous $300, citing challenges in the beer industry and maintaining an In Line rating. Meanwhile, Citi cut its price target to $265 from $290, following a wider-than-expected fourth-quarter loss for the fiscal year 2024. Analysts from Evercore ISI and Citi have maintained a neutral stance on the stock, indicating that Boston Beer’s shares are currently valued appropriately in the market. The company has projected an EPS of $8 to $10.50 for 2025, significantly below the consensus estimate of $11.51, attributing the lower guidance to increased advertising spending.
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