Goldman Sachs raises Boston Beer stock price target on Sun Cruiser growth

Goldman Sachs raised its price target on Boston Beer Company (SAM) to $187 from $119 but maintained a 'Sell' rating, citing significant volume deterioration in core brands like Truly (down ~20%) and Twisted Tea (down ~6%) in April/May. The firm anticipates these trends will pressure Q2 results and lead to a FY2025 guidance cut, overshadowing recent strong Q1 earnings and Sun Cruiser's growth. Goldman views the risk-reward as negative due to limited near-term catalysts and uncertainty regarding Truly's stabilization, despite the stock trading near its 52-week low.

Analysis

Goldman Sachs has maintained its Sell rating on Boston Beer Company (SAM) despite raising its price target to $187, signaling deep-seated concerns over the company's operational performance. The primary driver for this bearish stance is the significant deterioration in volume trends, with recent Nielsen data from April and May showing total company volume down approximately 8% year-over-year. This decline is led by a steep 20% drop in Truly volumes and a notable 6% fall in Twisted Tea, a brand whose growth is now seen as moderating. This trend is expected to pressure Q2 results and likely force a reduction in the company's fiscal year 2025 guidance. While the emerging Sun Cruiser brand is a positive development gaining market share, its contribution is currently insufficient to offset the sharp declines in the core portfolio. This negative forward-looking view contrasts with a strong Q1 2025 earnings report, where EPS of $2.16 massively beat forecasts and revenue grew 6.5%. However, analysts appear to be weighing the forward-looking volume data more heavily than the recent earnings surprise, with Goldman lowering its shipment and EPS estimates for 2025 and 2026, citing limited visibility on Truly's path to stabilization. The stock's position near its 52-week low, coupled with a P/E ratio of 40.21 and conflicting analyst ratings, creates a complex risk-reward profile.

Key Decisions for Investors

• Investors should exercise caution ahead of Q2 results, as deteriorating Nielsen volume data for core brands Truly (-20%) and Twisted Tea (-6%) strongly suggests a potential downward revision to FY2025 guidance.
• Given the stock is trading near its 52-week low and some metrics suggest potential undervaluation, long-term investors might consider the current price an entry point, contingent on signs of stabilization in the Truly brand.
• The growth trajectory of the Sun Cruiser brand should be closely monitored, as it currently represents the most significant, albeit small, potential offset to the substantial headwinds facing the company's legacy products.