Investing.com -- Piper Sandler downgraded Boston Beer Company Inc (NYSE:SAM) to "Neutral" from "Overweight" on slower-than-expected growth for Hard Mtn Dew and Twisted Tea, two key drivers of the brewer’s revenue.
Shares of Boston Beer were down 1.2% in early trading.
The brokerage lowered its price target for SAM to $275 from $370 and cut its 2025 and 2026 earnings estimates, reflecting a tempered outlook on innovation-led sales.
While Hard Mtn Dew continues to expand within Boston Beer’s distribution network, Piper Sandler said it will take more time than anticipated to achieve substantial success.
Twisted Tea, which accounts for roughly half of Boston Beer’s revenues, has also seen slowing sales growth, down to 5.8% in the 12 weeks ended Dec. 29, 2024, from 12% during the summer months.
However, Piper Sandler highlighted the potential of Sun Cruiser, a vodka tea, to drive premiumization in 2025, though competition from Surfside in the Mid-Atlantic region poses challenges.
Despite concerns over sales growth, the brokerage expects margin improvements to support earnings in the medium term, aided by relief from shortfall and prepayment fees.