Boston Beer Company (SAM) May Have Just Launched Its Next Big Growth Engine - Morgan Stanley
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Morgan Stanley analyst Filippo Falorni reiterated an Overweight rating and $1,400.00 price target on Boston Beer Company (NYSE: SAM) on the belief that Truly Extra could be SAM's next growth engine. Boston Beer (SAM) recently launched Truly Extra, a new hard seltzer product with higher alcohol by volume (ABV) of 8% vs. 5% ABV in the core Truly line; the product was launched in two flavors (Black Raspberry and Peach Mango), in a 16-oz can vs. the 12-oz can for the core Truly line. The launch was announced in October, tested in a few markets, and is just starting to be rolled out nationwide.
The analyst stated "We see the Truly Extra launch as an important growth driver at SAM going forward for a few reason: (a) it is targeted to the gas & convenience channel, where Truly (and the overall hard seltzer category) currently under-indexes; (b) it expands the Truly brand family into higher ABV products to better compete with hard seltzer offerings from competitors (e.g., Bud Light Platinum at 8% ABV, Cacti at 7% ABV, and Four Loko Hard Seltzer at 12% ABV); and (c) the 16-oz can format is more suitable for single-serve purchases, which could expand the base to consumers looking for an individual can purchase vs. the traditional variety pack for most hard seltzer brands. Assuming Truly Extra gets to 4-5% market share in the gas & convenience channel (and 2-3% share of the total hard seltzer category), and a 60-70% cannibalization, we could see the brand adding 200-300 bps to SAM's topline growth in the first year of launch."
Shares of Boston Beer Company closed at $1101.34 yesterday.
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