Susquehanna: Boston Beer's Guidance Could Be 'Ambitious'

Boston Beer Company Inc SAM shares are down 30-40 percent since their July peak of $330. But, with scanner comps being eight points tougher through February, there’s more downside risk than upside potential for the stock, according to Susquehanna.

The Analyst

Susquehanna’s Pablo Zuanic maintained a Neutral on Boston Beer and reduced the price target from $283 to $241.

The Thesis

Boston Beer is unlikely to lower the 2019 volume guidance of high single digits to low double digits that it issued during its Q4 call Feb. 20, Zuanic said in a Tuesday note.

Given the brewery's decelerating two-year stacked trends, even the low end of the guidance “could start to look ambitious,” the analyst said. 

This could exert pressure on the company’s stock, he said. To reflect slower growth trends, Susquehanna reduced its 2019 EPS estimate to $7.73 — 10 percent below consensus.

Despite these concerns, Boston Beer has done a good job of transforming the company, Zuanic said. The Angry Orchard brand has been turned around with product innovation, and the company continues to dominate the beer “alternatives” segment, he said.

The core Sam Adams beer brands continue to decline, the analyst said. 

Although Boston Beer’s performance through 2018 was broadly in-line with guidance, there are concerns related to the pace of growth the company can achieve in 2019, Zuanic said. 

Price Action

Boston Beer shares were down 3.25 percent at $236.57 at the time of publication Tuesday. 

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Photo by Aneil Lutchman/Wikimedia.