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On Wednesday, Citi analyst Wendy Nicholson revised the price target for Boston Beer Company (NYSE:SAM) shares, lowering it to $265 from the previous $290, while maintaining a Neutral rating on the stock. The revision comes as the stock trades near its 52-week low, having declined nearly 22% year-to-date. According to InvestingPro analysis, the company appears undervalued at current levels, with multiple indicators suggesting potential upside. Nicholson’s adjustment follows Boston Beer’s reported fourth-quarter loss for the fiscal year 2024, which was wider than expected. The company posted an adjusted earnings per share (EPS) loss of $1.68, factoring in after-tax impacts from contract settlement costs. This result was a deeper loss than Citi’s estimate of $1.36 and the consensus range of $1.56 to $1.31.
Boston Beer’s depletions, a measure of distributor sales, remained flat, outperforming Citi’s projection of a 2.5% decline and the consensus estimate range of a 2.8% to 2.4% drop. Year-to-date depletions through February 21 also remained flat, surpassing scanner trends due to a higher contribution from untracked channels, which Nicholson believes is mainly from the Sun Cruiser brand. Shipments decreased by 0.5%, which was more favorable than the anticipated 3.0% decline by Citi and the consensus range of a 2.4% to 2.1% decrease. The company maintains a strong financial position, with InvestingPro data showing more cash than debt on its balance sheet and a healthy current ratio of 2.03x.
In their guidance for 2025, Boston Beer set shipment and depletion expectations ranging from a low single-digit percentage decrease to a low single-digit percentage increase. The company also projected an EPS of $8 to $10.50, significantly below the consensus estimate of $11.51. The lower guidance is attributed to increased spending on advertising.
Despite the mixed results, Nicholson noted the potential focus on better top-line trends observed in the fourth quarter of 2024 and the first quarter to date of 2025. In response to these trends, Citi has raised its depletions estimate to a 0.4% increase but has reduced its 2025 EPS forecast for Boston Beer to $10, down from the previous estimate of $11.60. The revised price target of $265 reflects these updated expectations. InvestingPro analysis reveals the company maintains a strong overall Financial Health score of GOOD, with particularly robust cash flow metrics. Subscribers can access 8 additional ProTips and comprehensive valuation metrics in the Pro Research Report, providing deeper insights into Boston Beer’s investment potential.
In other recent news, Boston Beer Company reported its fourth-quarter 2024 earnings, revealing a substantial miss in earnings per share (EPS) compared to analyst forecasts. The company posted an EPS of -$1.68, falling short of the expected -$1.24. However, Boston Beer’s revenue slightly exceeded expectations, reaching $402.3 million against a forecast of $392.52 million. Despite the earnings miss, the company highlighted its focus on product innovation and market leadership in the hard tea segment, which helped offset challenges in the declining hard seltzer market. Analysts have noted Boston Beer’s cautious outlook for 2025, with expectations of low single-digit changes in depletion and shipment guidance. The company plans to increase advertising spending by $30-$50 million to strengthen its market position. Additionally, Boston Beer emphasized its commitment to investing in its brands, with new product launches aimed at driving future growth. The company’s gross margin reached 39.9% in Q4, marking the highest since 2020, and its full-year non-GAAP EPS was $9.43, up 31% year-over-year.
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