Just over a month after its stock crashed more than 20% in a session amid a nasty earnings warning because of slowing hard seltzer demand, Boston Beer (SAM) finds itself back in the same unfortunate position.
Blame fickle carb cutting, partying 20-somethings and overly optimistic executives.
Shares of Boston Beer crashed nearly 10% to $510 in pre-market trading on Thursday as the company pulled its financial guidance for the year because of brutal competition in the hard seltzer category where it competes with its Truly brand. In late July, Boston Beer stunned investors by slashing its full-year earnings outlook to $18 to $22 a share from $22 to $26, previously.
Now, investors will have to throw a dart at the board on where the company’s profits may come out as it works through a glut of hard seltzer.
“Since The Boston Beer Company, Inc.’s last guidance update for fiscal year 2021 financial performance, the market for hard seltzer products has continued to experience decelerating growth trends,” the company said in a statement. “While demand for the Company’s hard seltzer products continues to grow at faster than category rates in measured off-premise channels, we believe there will be continuing uncertainty about hard seltzer demand trends for the remainder of 2021.”
Boston Beer said it will take write-downs on hard seltzer and experience higher costs to rid its financial statements (and stores) of excess product.
Analysts at MKM Partners promptly cut their price target on the stock to $530 from $804. Citigroup also got in on the price cut game, pinning a $564 price target on Boston Beer shares compared to $618, previously.
The stretch of dreadful news for Boston Beer coincides with weak industry data for hard seltzer.
Hard seltzer sales dropped 2.8% for the four-weeks ended Aug. 28, according to the latest data from Nielsen. Sales for the hard seltzer category have slowed for five straight weeks.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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