Is Boston Beer On Track For 5% Volume Decline? Wedbush Analyst's Forecast And Expectations For FY23

Wedbush analyst Gerald Pascarelli reiterated a Neutral rating on the shares of Boston Beer Company Inc SAM with a $325 price target.

The company is slated to report second-quarter FY23 earnings on August 27, 2023.

For 2Q, the analyst expects SAM to deliver EPS of $3.22, which is below consensus EPS of $3.43, and see a 4.2% revenue decline.

The analyst noted that volumes are expected to be challenged again in 2Q due to lapping last year's launch of Truly Margarita, and price/mix forecast assumes some carryover pricing from 2022, which the analyst expects to moderate in the back half of the year.

SAM's efforts to double-down on Twisted Tea are paying off as underlying two-year trends for the brand have accelerated every month over the course of the quarter, said the analyst.

While this performance on a standalone basis is encouraging, underlying strength in Tea is completely being offset by continued pressure in Truly, which has yet to find a bottom, added the analyst.

Based on the analyst’s volume model, should current trends hold, the company is pacing to deliver a 5% volume decline for the full year.

So the analyst sees SAM to narrow guidance, keeping a 5% decline at the midpoint.

Given the volume deleverage expected to occur in 1H, the analyst believes SAM will hold its gross margin guidance unchanged, along with EPS, as that will give them more flexibility on A&P spend.

Price Action: SAM shares are trading higher by 0.809% at $303.71 on the last check Friday.