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A day after Boston Beer shares were drilled again amid a second consecutive earnings warning due to a soft seltzer market downturn, most analysts remain cautious on the stock at least until 2022.
“Even though the news is immediately negative, we think management is trying to be more transparent about what they are seeing after suffering a significant setback from investors in the last quarter. Ultimately, this should help the company. stock to stabilize and bottom out, but we don’t “We don’t expect stocks to rise significantly for at least the remainder of the calendar year, as we believe the primary shareholder base will need to change significantly. Senior beverage industry analyst Laurent Grandet at Guggenheim said in a new memo on Friday.
Grandet removed Boston Beer (SAM) from its best ideas list, while retaining a buy rating on the stock due to “strong” longer-term fundamentals.
“We still view Boston Beer as a company with relatively strong fundamentals, including an impeccable balance sheet, that is at the forefront of alcoholic beverage innovations. The next potential catalysts will be when the company releases its third quarter results on October 21 and an Investor Day the company expects in early December, ”added Grandet.
Boston Beer shares fell 4% on Thursday as the company withdrew its financial guidance for the year due to brutal competition in the hard salts category where it competes with its Truly brand. In late July, Boston Beer surprised investors by reducing its full-year earnings outlook to $ 18 to $ 22 per share, from $ 22 to $ 26 previously. At the time, the stock slumped 20% in one sitting.
“Since The Boston Beer Company, Inc.’s last forecast update for fiscal 2021 financial performance, the hard seltzer market has continued to experience a trend of decelerating growth,” said the company in a press release. “As demand for the Company’s hard seltzer products continues to grow faster than category rates in the measured offsite channels, we believe there will be lingering uncertainty about demand trends for hard seltzer for the rest of 2021. “
Boston Beer said it would write down hard seltzer water and incur higher costs to rid its financials (and stores) of excess product.
Grandet isn’t alone in becoming more cautious about the near-term outlook for Boston Beer stocks.
Analysts at MKM Partners quickly lowered their share price target to $ 530 from $ 804. Citigroup also participated in the lower price game, setting a price target of $ 564 on Boston Beer shares, up from $ 618 previously.
The terrible news streak for Boston Beer coincides with weak industry data for hard seltzer water.
Sales of hard seltzer fell 2.8% for the four weeks ended Aug. 28, according to the latest data from Nielsen. Sales in the hard salts category have slowed for five consecutive weeks.
Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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