Boston Beer Company (SAM) Plunges on Guidance Cut, Analysts Lower Price Targets

January 14, 2022 10:07 AM EST
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Price: $420.65 -3.43%

Rating Summary:
    9 Buy, 15 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 17 | Down: 15 | New: 37
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Shares of the Boston Beer Company (NYSE: SAM) are down over 6% in today’s trading session after the company lowered its FY21 guidance.

In what has been seen as a “surprise announcement” by Goldman Sachs, the company lowered its gross margin outlook to 38-40% from the prior 40-42%. SAM is calling for FY21 EPS between -$1.00 and +$1.00 vs $2.00-$6.00 prior.

“The Company now estimates that shipment growth for the Company’s products and gross margins will be below guidance. The estimated lower shipment growth is primarily a result of more aggressive wholesaler inventory reduction than expected, primarily affecting Truly. Additionally, due to higher than expected supply chain costs, which include costs for additional damaged and expired inventory resulting from the lower shipment volumes, we estimate gross margins to be lower than expected,” SAM said in a filing.

Goldman Sachs analyst Bonnie Herzon has seen the announcement as a “negative read-thru for companies investing significantly behind the hard seltzer category.” The analyst also slashed the price target by 6% to $425.00.

“We lower our FY21 EPS estimate by 94% to $0.25, implying -98% y/y growth and our FY22 EPS estimate by 7% to $14.60… Also, we note that Chairman and Founder James Koch terminated his 10b5-1 plan covering the proposed purchase of up to 356,000 shares of SAM's Class A Common Stock, which was first announced on 11/10/21,” the analyst said.

Similarly, RBC analyst Nik Modi also lowered the price target to $625.00 per share from the prior $661.00.

“While shipment news is not encouraging, we believe SAM’s improving depletions remain an encouraging sign for consumer demand. We adjust our FY’21E shipment growth to +15.7% and EPS to $0.59. For FY’22 we forecast shipment/depletion growth of +9.3%/8.8%, respectively, +8.8% (previously +9.6%/9%),” Modi wrote in his report.

SAM stock price is already down nearly 12% YTD.

By Senad Karaahmetovic |

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Goldman Sachs, Senad Karaahmetovic