The Ratings Game: Boston Beer’s third quarter got a boost from Truly hard seltzer but analysts warn of slowing growth

The Ratings Game: Boston Beer’s third quarter got a boost from Truly hard seltzer but analysts warn of slowing growth


Truly was one of the sales drivers for Boston Beer in the most recent quarter


Truly/Boston Beer Co.

Shares of Boston Beer Co. soared 14.7% on Friday, after the Samuel Adams parent reported earnings that beat expectations, thanks to sales of Truly hard seltzer and the Twisted Tea brand.


The company SAM, -2.03% reported after Thursday’s close earnings per share of $6.51, which blew past the FactSet consensus for $4.63. Revenue totaled $525.2 million, or $492.8 million less excise taxes. The FactSet revenue forecast was for $519.0 million.



Meanwhile, MKM Partners raised a warning flag for the months ahead.


“Boston Beer is effectively guiding to more 2021 growth (35% to 45%) than they just delivered in 3Q (36%),” wrote Bill Kirk, MKM executive director. “Not only do prior-year comparisons get more difficult, but hard seltzer, Boston’s primary growth driver, also continues to slow into Boston Beer’s 4Q’20.”


Read: Boston Beer’s Q3 profit up on hard seltzer demand


Boston Beer guided for shipments and depletions to increase between 35% and 45% with prices to go up nationally 1% to 2%.


MKM maintained its neutral stock rating and $780 fair value estimate.


“This guidance appears extremely reliant on very successful launches of Truly Iced Tea and Truly Extra, and other new flavors,” Kirk said. “While the company has an incredible track record of innovation, we believe these forecasts are too optimistic.”


UBS analysts are more confident in the prospects for Truly going forward.

See: Michelob Ultra Organic Seltzer adds to swiftly growing hard seltzer category


“We view management’s ’21 depletion outlook as practical, as it does not assume Truly doubling for the first time since launch in 2016, however it does assume easier compares in the on-premise will stabilize its craft portfolio,” wrote analysts led by Sean King.


UBS rates Boston Beer stock buy and raised its outlook to $1,080 from $1,000.


Boston Beer stock has nearly tripled, up 184.6% for 2020 so far, while the S&P 500 index SPX, -0.79% has gained 6.2% for the period.