On Wednesday, UBS adjusted its outlook on Boston Beer Company (NYSE:SAM), reducing the stock's price target from $390 to $355, while retaining a Neutral rating.
The revision follows Boston Beer's report of a fourth-quarter net loss of $1.49 per share, which was significantly below market expectations. The shortfall was largely due to sales underperformance, part of which was attributed to the greater-than-anticipated impact of cycling an extra selling week.
The company's initial guidance for 2024 also disappointed, coming in approximately 20% below consensus at the midpoint. This is primarily due to weaker than expected top-line forecasts and a 2% decline in depletions so far this year. Additionally, Boston Beer announced the upcoming retirement of CEO David Burwick, which is expected within the next few weeks.
The company's stock was observed trading 10% lower after hours, a reaction attributed to the combination of the earnings miss, a subdued outlook for 2024, and ongoing concerns regarding the long-term growth potential of the business.
UBS noted that while the volume miss is not an isolated incident this earnings season, the market's response underscores the apprehension surrounding Boston Beer's future performance.
Despite the early stages of a margin recovery narrative, UBS expressed the need for greater certainty that there is potential for upward revisions to their earnings estimates before adopting a more positive stance on the stock.
The firm highlighted that even with the revised estimates, Boston Beer shares are set to open at approximately 33 times UBS's projected 2024 earnings per share, which is a premium compared to its high-growth peers and only slightly below the five-year average.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.