Boston Beer Stock Falls After FY21 Outlook Cut; Analysts Lower Price Target

Boston Beer Company Inc SAM has lowered its guidance for full-year 2021 on disappointing performance in 2021 due to higher-than-expected supply chain costs and lower-than-expected shipment growth for its products and gross margins.

• For FY21, Boston Beer expects EPS to be loss $(1)- profit $1 versus prior guidance for EPS $2 - $6 and the consensus of $5.02.
• The company sees FY21 gross margin of 38% - 40% (prior view 40% - 42%).
• The company's 2021 projection includes depletions growth of 21% - 22%, a rise of 15% - 16% in shipments, and increased investments in advertising, promotional, and selling expenses of $85 million - $95 million. The company sees a national price increase of 2% - 3%.
• The company's preliminary assumptions and targets for FY22 have not changed since its guidance update on October 21, 2021.
• The company's preliminary 2022 outlook includes depletions & shipments percentage increase between mid-single digits and low double-digits.
• It expects a gross margin of 45% - 48% and increased investments in advertising, promotional, and selling expenses of between $10 million and $30 million for FY22.
• Stock Rating: Following the news, MKM Partners maintained a Hold rating on Boston Beer and lowered the price target to $440 from $475.
• RBC Capital reaffirms Outperform rating but lowered the price target from $661 to $625.
• Credit Suisse also cut the price target from $935 to $785, with an Outperform unchanged.
• Price Action: SAM shares are down 9.40% at $443.00 during the market session on the last check Thursday.