She also more than halved her price target to $400 from $825.
“We are downgrading SAM, as we see 30% downside to 2022 consensus EPS estimates,” she wrote in a commentary.
“Seltzer's summer slump continued through mid-August, with the category posting a 0.4% revenue decline.”
Further, “While SAM is gaining more share than we'd expected, the category is slowing more dramatically than we'd modeled. We don't see an on-premise recovery as a sufficient offset,” Azer said.
The stock recently traded at $567, down 7%, leaving it down 46% over the past three months.
“While a market leading position in hard seltzer has been transformative for the company's growth prospects, a category slowdown, tough upcoming comps and increased competition leave us cautious on SAM's valuation in the face of potential downward estimate revisions,” Azer said.
Also, “While we acknowledge SAM's share gains in the category throughout the year, category growth has come in below our expectations,” Azer said.
That “reminds us of the setup for SAM shares in 2015 when valuation became stretched due to overly high expectations for the growth of SAM's cider business.”
Morningstar analyst Nicholas Johnson is more bullish, putting fair value at $1,020 for Boston Beer.
“The firm has shown a remarkable proclivity to not only augment its portfolio in alignment with the latest growth vectors, but to also capture a disproportionate share of the economic rents generated from this growth by being one of the first movers,” he wrote last month.