Boston Beer Company (SAM) May Have Just Launched Its Next Big Growth Engine - Morgan Stanley

March 18, 2021 6:34 AM EDT
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Price: $719.61 -0.96%

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    9 Buy, 13 Hold, 3 Sell

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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."

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 Company closed at $1101.34 yesterday.

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