Boston Beer Company (SAM) PT Lowered to $800 but Morgan Stanley Stays Overeweight Ahead of Hard Mountain Dew Launch
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Morgan Stanley analyst Filippo Falorni lowered the price target on Boston Beer Company (NYSE: SAM) to $800.00 (from $990.00) after the company withdrew its FY21 guidance at an investor conference citing uncertainty on the growth outlook for the US hard seltzer category, despite continued Truly share gains.
The analyst reiterated an Overweight rating, stating "we are lowering our FY21/22 EPS by ~15% and our price target by ~19% reflecting the recent US scanner data slowdown for hard seltzer and margin pressure on inventory write-offs and fees. We now expect FY21 SAM's volume growth of +23% vs. the prior withdrawn guidance of +25-40% and FY21 EPS of $17.25 ex-ASU 2016-09 vs. the prior withdrawn guidance of $18.00-$22.00. Clearly SAM is experiencing a much sharper deceleration in hard seltzer category growth than we previously expected and visibility on the growth outlook is very low. We stay OW at this lower level but we believe the market will continue to put SAM in the "penalty box" until there is more visibility on the growth outlook for the seltzer category in FY22 and beyond, and there are some early results from one of SAM's innovations scheduled for next year (including the Hard Mtn Dew launch with PEP, the RTD partnership with Sauza, and the Bevy Long Drink)."
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