Cowen’s Azer cuts her price target on Boston Beer by over 50%

Boston Beer Company Inc (NYSE: SAM) has lost more than 50% in the stock market since April, and Cowen says the decline is not stopping anytime soon.

Cowen analyst downgrades the stock to underperform

On Wednesday, Cowen’s Vivien Azer slashed her price target on the beverage company sharply from $825 to $400 as she downgraded the stock from ‘market perform to ‘underperform’. The bearish call translates to an about 30% potential downside from here.

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Boston Beer’s seltzer sales remained unexciting this summer, which as per Azer, could see 2022 consensus EPS estimates be downwardly revised by as much as 30%.

“While SAM is gaining more share than we’d expected, the category is slowing dramatically than we’d modelled. We don’t see an on-premise recovery as a sufficient offset. A category slowdown, tough upcoming comps, and increased competition leave us cautious on SAM’s valuation,” she wrote in a commentary.

Boston Beer shares are down about 7.0% on Wednesday. The $7.0 billion company now has a price to earnings ratio of 29.92.

Tiffany McGhee’s remarks on CNBC’s “Halftime Report”

On CNBC’s “Halftime Report”, Pivotal Advisors’ Tiffany McGhee, who owns the stock, agreed that things were not looking good for Boston Beer. On top of the sales decline, she said, the company now faces more intense competition from the likes of White Claw.

“Growth in seltzer was up 67% from 2019 numbers, which is insufficient considering that they were doing about 180% on average in that category last year through the pandemic. It’s a bit hard for me to wrap my head around because I’d have thought people would still be drinking beer. So, I’m just keeping my fingers crossed and hoping that they rebound,” she added.

The news comes more than a week after Boston Beer joined hands with PepsiCo to produce an alcoholic mountain dew drink.