Morgan Stanley analyst Eric Serotta has maintained their bearish stance on SAM stock, giving a Sell rating today.
Eric Serotta has given his Sell rating due to a combination of factors that suggest a less than optimistic future for Boston Beer. After reviewing the fourth quarter results and the fiscal year 2024 earnings per share guidance, which was approximately 20% below the consensus at its midpoint, Serotta sees significant challenges ahead. The company’s gross margin recovery is anticipated to be substantially lower than expected, largely due to fees associated with third-party production shortfalls and pre-payment expenses. Additionally, the company’s shipment and depletion guidance for FY24 reflects a broad range of potential outcomes, which implies uncertainty in future performance.
Furthermore, the slowing growth in Twisted Tea volumes and the projected decline in market share for Truly within the shrinking malt-based hard seltzer category reinforce the expectation of a negative trend in shipment and depletion rates. Serotta has also factored in the implications of the CEO succession plan, with the current President and CEO set to retire in April 2024. With the margin recovery expected to be muted over the next two years and limited visibility into the company’s potential to return to previous gross margin peaks, Serotta’s analysis leads to a reduced price target and a continued Sell recommendation for Boston Beer.
Serotta covers the Consumer Defensive sector, focusing on stocks such as Brown-Forman B, Boston Beer, and Molson Coors. According to TipRanks, Serotta has an average return of -18.2% and a 27.78% success rate on recommended stocks.
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Boston Beer (SAM) Company Description:
Boston Beer Co., Inc. engages in the business of alcoholic beverages. Its brands include Samuel Adams, Twisted Tea, Angry Orchard, and Truly Hard Seltzer. The company was founded by C. James Koch in 1984 and is headquartered in Boston, MA.
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