By Boston Beer faced significant losses in the most recent quarter, causing concern among investors on Wall Street. The brewer reported a 12.2% decline in shipments, totaling 1.5 million barrels of its beverages in the fourth quarter. This downward trend was consistent throughout 2023.
Financial Results and Projections
The company posted a loss of $1.49 per share, a sharp contrast from the 93-cent loss reported in the same period a year ago. This figure was also below the expected consensus of a 29-cent loss by analysts tracked by FactSet. Revenue also experienced a 12% drop from the previous year, reaching $394 million, falling short of the anticipated $414 million in revenue.
Boston Beer noted that retail unit sales to consumers, known as depletions, decreased by 2% in the first eight weeks of 2024 compared to the same timeframe in 2023. Looking ahead, earnings for the current year are projected to be in the range of $7 to $11 per share, falling short of analyst expectations of $11.29 per share.
Leadership Changes
In addition to financial struggles, Boston Beer announced the retirement of CEO Dave Burwick, effective April 1. Burwick will be succeeded by Michael Spillane, ushering in a new era of leadership for the company.
Stock Performance
Following these developments, Boston Beer’s stock, previously a top pick, plummeted by 13% to $321 shortly after the markets opened on Wednesday.
Boston Beer’s range of products saw a spike in popularity during the pandemic, with their hard cider offering Truly standing out. However, Truly has now taken a backseat in the company’s portfolio as management focuses on reviving sales by toning down its bold flavors.
Analysts’ Outlook on Boston Beer
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CFRA’s Stand: Garret Nelson from CFRA doesn’t anticipate Boston Beer regaining its pandemic-era success. Lowering his stock recommendation to Sell, Nelson predicts the shares to drop to $275 within the next year.
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UBS Analysis: Peter Grom from UBS maintains a Neutral rating on the stock but has adjusted the price target to $355 from $390. While he sees long-term potential for the brand’s recovery, Grom remains cautious about short-term sales growth.
Positive Indicators for Boston Beer
Despite challenges, there are some positive factors for Boston Beer:
- Twisted Tea’s Success: Twisted Tea, an alcohol-infused iced tea, surpasses Truly in off-premises sales channels. Management plans to fuel its growth further this year, including the introduction of a lower-calorie version.
Future Prospects and Concerns
The company’s focus on Twisted Tea and other initiatives indicate potential for growth. However, concerns linger around Boston Beer’s long-term growth prospects, leaving the future uncertain.
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