On Tuesday, Boston Beer Company (NYSE:SAM) stock received an upgrade in its rating from Jefferies. The company's rating was raised to Buy from Hold, with a new price target set at $360.00.
The upgrade is based on the expectation that flavored malt beverages (FMBs) and ready-to-drink (RTD) products will experience growth between 4-5%, taking market share from seltzers and domestic beers.
The analyst noted that hard teas are currently leading within the FMB category, with strong brand recognition. Specifically, 43% of the brands receiving honorable mentions are hard teas, with Twisted Tea, a product of Boston Beer, being a significant contributor at 19%. This brand recognition is seen as a key factor in the positive trends for Boston Beer.
The report also highlights that the decline in seltzer sales, which previously affected the company's valuation, is now decelerating. This slowdown in the decline is viewed as a positive shift for the company's stock.
Additionally, Twisted Tea's gains in the FMB market have now surpassed those of Truly, another Boston Beer product, indicating a strong performance for the company in this segment.
The upgrade suggests that Boston Beer Company is experiencing an inflection point in its market trends. The company's focus on FMBs, particularly hard teas, is positioned as a strategic advantage in the current beverage market landscape.
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