Boston Beer stock has soared 130% in 2020. Guggenheim analayst Lauren Grandet says that rapidly growing demand for hard seltzer and tea will fuel more upside.
Justin Sullivan/Getty ImagesBoston Beer stock has jumped 130% in 2020, and Guggenheim argues that rapidly growing demand for hard seltzer and tea will fuel more upside for the brewer.
Analyst Laurent Grandet reiterated a Buy rating on Boston Beer (ticker: SAM), while taking his price target up to $1,142 from $977. He writes that he’s increasingly confident about the company’s upcoming launch of Truly Iced Tea Hard Seltzer (“Truly Tea”), due out in January.
Along with privately held White Claw, Boston Beer’s Truly brand is one of the two dominant players in the hard-seltzer market. Truly Tea, which will come in four flavors, is a further push to appeal to more health-conscious drinkers, who want a lighter beverage.
Grandet writes that retailers have already expressed enthusiasm about the Truly Tea products, especially as the “hard tea segment is more than twice the size of hard lemonade (pre-Truly Lemonade).”
Editor's Choice
While there could be some limited cannibalization of the company’s hard seltzer and lemonade products, he’s still optimistic about the category’s overall ability to grow. He’s modeling for the hard seltzer and adjacent products (like Truly Tea) to reach 15% of the beer category by the end of next year, from 10% today—although some of his industry sources are even more upbeat, estimating it will reach 25% in “the next couple of years, and eventually approach 40% of beer.”
Grandet thinks that Truly Tea can bring in $350 million of retail sales in its first year, and that helps boost his full-year estimates for fiscal 2021 and 2022, leading to his increased price target.
Hard seltzer has exploded in popularity in recent years, and attracted plenty of new entrants. Boston Beer bulls say it can hold its own against increasing competition, in part because of ongoing product innovation and the rapidly growing demand for low-calorie alcoholic beverages that have a healthier profile in the minds of consumers.
Boston Beer is up 0.2% to $870 in recent trading.
Write to Teresa Rivas at teresa.rivas@barrons.com
September 25, 2020 at 08:52PM
https://www.barrons.com/articles/boston-beer-stock-doubled-hard-seltzer-hard-tea-51601041886
Boston Beer Stock Has Doubled on Hard Seltzer. Hard Tea Is the Next Leg Up. - Barron's
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
No comments:
Post a Comment