Boston Beer: Cutting Fair Value Estimate and Raising Uncertainty Rating to Very High

We are cutting our fair value estimate for narrow-moat Boston Beer to $350 per share from $497 to incorporate a more cautious sales outlook, mainly due to a more protracted decline in demand for hard seltzer (roughly 30% of total volume in 2023) and lower operating margin. Our fair value estimate implies price/earnings of 32 times on our 2025 earnings estimate and a 2025 enterprise value/EBITDA multiple of 16 times. We are also raising our Morningstar Uncertainty Rating to Very High from High as weak hard seltzer sales trends are likely to cause volatile operating results.