Jefferies Downgrades Boston Beer On Guidance Risk, Likes Spectrum Brands And Newell Rubbermaid More

On Thursday, Jefferies issued an industry note regarding consumer products highlighting Boston Beer Co Inc SAM, Spectrum Brands Holdings, Inc. SPB and Newell Rubbermaid Inc. NWL.

In their report, Jefferies analyst Kevin Grundy and associates Peter Schanzer and Herb Eppich upgraded Spectrum Brands and downgraded Boston Beer, while calling Newell Rubbermaid one of their top long ideas.

Boston Beer Co: Hold, $210 PT

"After three downward revisions (in four qtrs.), we see risk to SAM's FY16 guide and longer-term risk to the co.'s outlook owing to (i) continued pressure in beer; and (ii) shortening innovation cycles in lateral alcohol categories. We are trimming our FY16-17 estimates," Jefferies stated regarding Boston Beer.

Related Link: Anheuser-Busch InBev Reports Breckenridge Brewer In CO As 7th Craft Brewery Acquisition

Jefferies mentioned that the alcohol industry has become more competitive and more subject to short innovation cycles. This has made forecasting increasingly difficult and has put pressure on margins.

Spectrum Brands: Buy, $134 PT

Jefferies commented that for Spectrum Brands, "organic growth is accelerating and closing the gap vs. staples peers behind increased investment spending, expanded distribution, and enhanced execution."

The note continued, "We expect SPB to deliver closer to 3–4 percent org sales growth going forward."

The analysts also noted that due to acquisitions and cost cutting, EBITDA margins have increased from 14.5 percent to 17.1 percent.

Newell Rubbermaid: Buy, $54 PT

"While integration risk cannot be easily dismissed, potential synergy upside from merger with Jarden Corp JAH could be substantial," the analysts commented on Newell Rubbermaid.

Jefferies also highlighted the capabilities of the management, which could drive the company to higher growth opportunities.

At The Time Of This Publication...

• Boston Beer was trading at $181.50, down 5.54 percent.
• Spectrum Brands was trading at $100.84, up 3.22 percent.
• Newell Rubbermaid was trading at 40.14, down 0.52 percent.
• Jarden Corp was trading at $53.39, down 0.38 percent.