CLSA's Caroline Levy downgraded the rating on Boston Beer Co Inc SAM to Underperform, while maintaining the price target at $200, due to the ongoing weakness in the company's flagship brews.
Continuing Declines
Levy explained that the continuing weakness in Cider, Lager and Seasonals was driven by increased competition. "Based on recent IRI data, discussions with distributors, and the results of our recent beer survey, we now see flat depletion growth in 2016 (vs company guidance of mid-single digits)," the analyst mentioned.
Coney Island
"However, Boston Beer's Coney Island is firmly behind Pabst's Not Your Father's, and now must fight off hard soda launches," from two more of its competitors, Levy stated, while adding, "We see hard root beer as a positive contributor to ‘16 growth, but not enough to offset declines elsewhere."
Estimates Lowered
The 2016 and 2017 EPS estimates have been lowered from $7.90 to $7.85 and from $9.00 to $8.55, respectively, to reflect slower top line growth.
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