Boston Beer (SAM) - Get Boston Beer Company, Inc. Class A Report shares fell more than 26% on Friday after the brewing giant posted a surprise second-quarter loss that spurred price-target cuts from several analysts, and a downgrade from Goldman Sachs.
At last check, Boston Beer shares were down 26.65% at $700.06 after the company said it “overestimated” the growth of its hard-seltzer category. The company reported second-quarter profit of $59.2 million, or $4.75 a share, down from $4.88 a share a year ago and below analysts’ forecasts of $6.60 a share.
The maker of Samuel Adams beer and Truly-brand hard-liquor seltzer drinks said sales increased 33.3% from a year ago to $602.8 million, though they also were short of analysts’ forecasts of revenue of $657.6 million.
For the full year, Boston Beer executives now expect earnings of $18 to $22 a share, after previously stating an outlook of $22 to $26 a share. The new forecast is below the outlook the company provided before raising it along with first-quarter earnings; the previous forecast was $20 to $24 a share.
TheStreet’s Jim Cramer said the surprisingly negative results “blindsided” both investors and analysts, noting that the company should have given a heads up to Wall Street that it would be so far off the mark with its earnings.
That followed Cramer's assessment in mid-June that he would sell Boston Beer following a negatively toned research note from Citi claiming investors' expectations that Boston Beer's Truly Tea and Truly Punch launches would drive revenue were lofty.
Analysts seemed to agree with Cramer's Friday tweet, with Goldman Sachs saying it was “very surprised by the magnitude" of the miss. Goldman downgraded the stock to neutral from buy and lowered its one-price target to $875 from $1,550.
Other Wall Street firms also lowered their price targets on the stock, with Jefferies cutting its one-year target to $685 from $760, Citi cutting its target to $854 and Morgan Stanley lowering its target to $990 from $1,450, though Morgan Stanley also noted the reduced valuation offers “… a more favorable risk/reward” for investors.