Jefferies analyst, Kevin Grundy, cut his below market target price on shares of Boston Beer (NYSE: SAM) to $145 (from $168.00) as 1Q EPS of $0.54 came in well below the $0.93 Street est. Both revenue (-3.6%) and the operating margin (-425 bps) missed expectations. The firm maintained a Hold rating.

SAM's revs came in c. -4% below Street est. on -5% depletion declines, as both Sam Adams and Angry Orchard brands declined YoY. Low barriers to entry in crafts and shortening innovation cycles in lateral alcohol categories continue to pressure SAM's topline as the co. once again lowered its FY16 depletions guide for the 5th time in 6 qtrs (i.e. now -4%-+2% depletions, down from + MSD %). 1Q GM % missed (48.5% vs. Street 49.7%) and higher SG&A spend (42.5% vs. 39.5%) resulted in a >40% OI miss. EPS of $0.54 came in well below Street est. of $0.93.

SAM also lowered its EPS guidance to $6.50-$7.30, down -12% from $7.60-$8.00 prior vs. Street $7.78. Visibility remains very low and there is continued risk to SAM's outlook owing to the difficult industry environment. The analyst sees fair value in the mid-$140s (20% discount on EV/ULFCF basis).

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Shares of Boston Beer Company closed at $173.31 yesterday.