Boston Beer's Truly Hard Seltzer Has Cowen Buzzing

Boston Beer Company Inc SAM shares were moving higher Thursday after the company received an analyst upgrade on the strength of its red-hot hard seltzer, Truly.

The Analyst

Cowen analyst Vivien Azer upgraded Boston Beer Co. from Market Perform to Outperform and raised the price target from $386 to $450.

The Thesis

Truly has become a staple in the explosive hard seltzer category, and Boston Beer is riding the wave to new heights, Azer said in the upgrade note. (See her track record here.)

“With Truly continuing to drive outsized growth for SAM, and with new formulations and a lemonade line extension slated for next year, we believe Truly will continue to transform SAM’s growth algorithm, and offset continued softness in beer and cider."

Boston Beer has been a tremendous beat-and-raise story over the course of 2019, the analyst said, adding that she expects more good news in 2020, and is modeling for 22% revenue growth.

Truly has just a 9% stake in the flavored malt beverage category and accounted for 35% of Boston Beer's sales in Nielsen-tracked channels in the third quarter, Azer said. 

“Indeed, while the hard seltzer trend is not new, it does seem to have the staying power that we had seen for cider over much of the last six years."

The company can deliver revenue growth of 20% in the third quarter, and recent trends have been impressive — but a recent deceleration makes the company a buying opportunity, according to Cowen. 

Price Action

Boston Beer shares were up 5.11% at $403.09 at the time of publication. 

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