By Senad Karaahmetovic
Shares of Boston Beer (NYSE:SAM) are down almost 10% in premarket trading Friday after the company trimmed its full-year EPS guidance.
The company reported a Q2 EPS of $4.31, down from $4.75 in the year-ago period and missing the consensus estimates of $4.42 per share. Net revenue came in at $616.2 million, up 2.2% YoY and also below the expected $622.4 million.
For the full year, Boston Beer expects adjusted EPS to be in the range of $6 to $11, down from the previous forecast of $11 to $16, while analysts were expecting $11.06 per share. The company expects FY gross margin in the range of 43% to 45%, down from 45% to 48%.
SAM said it expects distributors to keep inventory levels until the end of 2022 below last year’s levels and anticipates FY depletions and shipments to be down between 2% and 8%.
An RBC analyst cut the price target to $314 from $331 as the visibility remains low.
“As expected, an ugly quarter for SAM. While the guidance cut was worse than expected it makes sense considering '22 trends. While we appreciate mgmt.’s messaging, new seltzer strategy, and more prudent approach to guidance (which is now more believable) we acknowledge visibility remains low into 23. We are now calling for shipment/depletions of -7%/-8% respectively and lowering EPS to $8.81,” the analyst explained in a client note.
A Jefferies analyst echoed the RBC analyst's comments about “still low” visibility. As such, he reiterated a Hold rating and cut the price target to $321 from $341.
“A recovery in the shares will be largely tethered to stabilization in seltzers (not there yet), which along w/ supply chain optimization and easing commodities could drive substantial GM % expansion over time (i.e. low-mid-50% vs. 43-45% in FY22; every 100 bps = 10% to EPS). Despite stock underperformance, multiple appears full at 26x F23 P/E,” the analyst said in a client note.