Shares of Boston Beer (SAM) - Get Boston Beer Company, Inc. Class A Report dropped as Cowen analysts, noting the brewer's decision to pull its guidance amid flagging sales in hard seltzer, reiterated an underperform rating.
Cowen affirmed a $400 price target on Boston Beer.
Revenue trends continue to soften, the investment firm said. Its previous expectations of full-year EPS at the lower end of the range were probably too optimistic.
"While a market-leading position in hard seltzer has been transformative for the company's growth prospects, a category slowdown, tough upcoming [comparisons] and increased competition leave us cautious on SAM's valuation in the face of potential downward estimate revisions," analyst Vivien Azer wrote.
Boston Beer shares at last check were off 8.8% to $510.
Boston Beer's management said it expects cost headwinds associated with inventory write-offs and shortfall fees for third-party distributors.
Boston Beer on Wednesday withdrew its full-year guidance, saying that continuing weakness in the hard-seltzer market would require write-offs and other costs.
The company said it now expected full-year diluted earnings would fall below its previous guidance of $18 to $22 a share.
Growth in the market for hard seltzer products has slowed.
Industry reports have estimated that the full-year 2021 hard-seltzer retail sales will be 100 million cases fewer than the volumes estimated in May 2021 and more than 30 million fewer than the volumes estimated in July 2021, Boston Beer said in a statement.