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Boston Beer Co Inc SAM

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More Vindication for Boston Beer Bulls in Q1; Balance of the Year to Be Pivotal as Lofty Comps Loom

Analyst Note

| Nicholas Johnson, CFA |

Judging from the stark rise in narrow-moat Boston Beer’s stock price in the month leading up to its first-quarter earnings print, it seemed like investors had disabused themselves of their concern that chinks in the brewer’s seltzer-clad armor would soon start to appear. For now, they were right, as the firm reported massive upside on both the top and bottom lines relative to FactSet consensus. With the coterie of Street bulls vindicated yet again, we expect the bandwagon to get even fuller over the coming weeks. For our part, we were surprised by the 5% uptick in management’s shipment guidance (to 40%-50%); we plan to raise our 2021 forecast to the high end of that range (from 40% previously) given the seltzer category’s penchant for upside surprises. This, in conjunction with time value, should bring our fair value to $1,020 from $930. With shares rising over 7% on the news, we believe they reflect more myopia than they have in a while, and the implied market assumptions are divorced from any reasonable appraisal of long-term fundamentals, in our view.

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Company Profile

Business Description

Boston Beer is a leader in U.S. high-end malt beverages and adjacent categories, with strong positions in craft beer, hard cider, and hard seltzer. The firm sells an array of flavor variants and package sizes, predominantly centered around four priority brands: Samuel Adams, Angry Orchard, Twisted Tea, and Truly Hard Seltzer—its biggest growth engine. Its drinks are produced in both company-owned breweries as well as through third-party contract arrangements, and while the company primarily goes to market through independent wholesalers (as mandated by law), it operates a fairly large salesforce to induce demand across the value chain (distributors, retailers, and drinkers). The preponderance of revenue is generated domestically.

One Design Center Place, Suite 850
Boston, MA, 02210
T +1 617 368-5000
Sector Consumer Defensive
Industry Beverages - Brewers
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 28, 2020
Stock Type Aggressive Growth
Employees 2,423


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