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06/13/2017

Sam Adams Trends “Progressively Worse”; FMB Prospects Dimming? Cowen Downgrades

Nearing end of Q2, Boston Beer so far unable to recover from tuff start to year – and financial community took notice. SAM stock down “almost 20% YTD,” Cowen and Co’s Vivien Azer reported yesterday, headlining “Sell SAM.”  At press time stock down over 20% YTD to $135.45/share.  With “fundamental top line challenges” and current guidance “at risk,” Vivien believes “further downward revisions would result in continued share pressure from current levels.” So Vivien and co “reiterate Underperform” and revised Price Target to $126/share.

Amid slew of issues, Sam Adams “posted consistent volume declines in Nielsen since mid-2015,” and declines “have gotten progressively worse over the course of 2017,” Vivien wrote. Sam Adams franchise volume now down more than 20% YTD thru Jun 3 in Nielsen All Outlet data. Big aspect of Sam’s road to Q2 recovery was much touted new look Summer Ale with new ad campaign to boot.  Sam Seasonal trends did “improve” since launch of Summer Ale. But it’s still down 28% in scans for 13 wks thru May 20 in Nielsen scans, Vivien shows.

Then too, “we are becoming increasingly cautious around the growth prospects for FMBs,” only aspect of Boston’s biz that grew this yr.  Twisted Tea “decelerated in 4 out of the last 5 periods” (tho still up low-double-digits YTD) and “Truly Spiked is on the heels of lapping initial distribution gains made last year” with enhanced competition in space. At this point, “non-beer” (cider, tea, alc seltzer and soda) makes up “roughly 2/3” of Boston’s total off premise biz in Nielsen data.  Angry Orchard sales show “continued weakness” and hard sodas proving to be “a flash in the pan.” It’d take “a meaningful turnaround across beer and cider, coupled with accelerating growth in FMBs” to “reduce the potential for additional downward guidance revisions,” sez Vivien.

Publishing Info

  • Year: 2017
  • Volume: 8
  • Issue #: 51
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