On Friday, Piper Sandler adjusted its outlook on Boston Beer Company (NYSE: NYSE:SAM), raising the stock's price target to $330 from $325, while maintaining an Overweight rating.
The firm highlighted Boston Beer Company's third-quarter earnings, which surpassed expectations, crediting improved margins for the strong performance. The company reported its highest gross margin since the fourth quarter of 2020 and an EBITDA margin that was 2.5 percentage points above Piper Sandler's estimate.
Despite facing a higher tax rate and increased marketing expenditures, Boston Beer Company has maintained the midpoint of its earnings per share (EPS) guidance. Piper Sandler anticipates potential gains from the national launch of Hard Mtn Dew through the company's distribution system, with most of the impact expected in 2025.
Although there have been greater-than-anticipated disruptions during the transition period, sales of Hard Mtn Dew still saw growth in the third quarter of 2024. Boston Beer Company is expected to retain its shelf space during the Spring 2025 resets, in contrast to a 4% decrease in 2024. Additionally, recent product launches, particularly those with higher alcohol by volume (ABV), have been performing well.
Based on these factors, Piper Sandler has increased its 2024 EPS estimate from $8.50 to $9.40, and its 2025 EPS forecast from $11.75 to $12.00. The new price target of $330 is based on approximately 27.5 times the firm's estimated 2025 earnings per share for Boston Beer Company.
In other recent news, Boston Beer Co Inc has repurchased $191 million worth of shares year-to-date and increased its share repurchase authorization by $400 million. These are among the recent developments for Boston Beer Co Inc.
On another note, CFRA has adjusted its outlook on Boston Beer Company, raising the 12-month price target from $230.00 to $250.00, while maintaining a Sell rating on the stock. This revision is in response to weaker growth expectations and increasing competition in the market. The firm continues to perceive the stock as overvalued given the challenging fundamental backdrop facing the company.
InvestingPro Insights
Boston Beer Company's recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $3.49 billion, reflecting its significant presence in the beverage industry. With a P/E ratio of 31.91 for the last twelve months as of Q2 2024, SAM is trading at a relatively high earnings multiple, which could be justified by its recent earnings beat and improved margins.
InvestingPro Tips highlight that SAM's management has been aggressively buying back shares, which often signals confidence in the company's future prospects. This aligns with Piper Sandler's optimistic outlook and increased EPS estimates. Additionally, SAM holds more cash than debt on its balance sheet, indicating financial stability as it navigates market challenges and invests in new product launches.
The company's revenue for the last twelve months as of Q2 2024 was $2 billion, with a gross profit margin of 43.76%. While revenue growth has been slightly negative at -2.76%, the EBITDA growth of 16.73% over the same period supports Piper Sandler's observation of improved margins.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 8 more tips available for Boston Beer Company on the platform.
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