UPDATE: Boston Beer (SAM) Hit as UBS Sees the Music Stopping

October 1, 2012 6:46 AM EDT Send to a Friend
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Price: $233.88 --0%

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    2 Buy, 6 Hold, 3 Sell

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(Updated - October 1, 2012 3:20 PM EDT)

Shares of Boston Beer Company (NYSE: SAM) are under pressure Monday after UBS downgraded the stock from Neutral to Sell and cut its price target from $103 to $96, saying new product distribution has stalled and there is downside risk to estimates.

"Growth trends for Twisted Tea and Angry Orchard have stalled in recent months, w/ACV distribution in Nielsen data sequentially flat at 29% and 22%, respectively," analyst Kaumil S. Gajrawala notes. "The abrupt flattening suggests the easy distribution opportunities are behind the brands, and same-store-sales growth will be the focus - posing downside risk to consensus revenue growth estimates."

UBS also sees weakness in Craft Beers, with Boston Lager's declines in excess of the other large flagships. "While Seasonals should support a strong 3Q with the rollout of Octoberfest, the Beer port folio weakness remains and will be exposed by slowing distribution gains of Twisted Tea and Angry Orchard," the analyst notes. If current trends continue, 2013 Boston Beer topline growth could be 4.6%. If Boston Beer is too meat the 8.6% consensus top-line expectation, further Further successful innovation would be required the analyst notes.

While Boston Beer has a history of innovation, meeting consensus estimates is now reliant on continued, successful innovation. "Without an improvement in the core portfolio trends, we believe Boston Beer will enter a period of earnings disappointment beginning in 2013," Gajrawala said.

For an analyst ratings summary and ratings history on Boston Beer Company click here. For more ratings news on Boston Beer Company click here.

Shares of Boston Beer are down 2.9 percent to $108.69.




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