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Credit Suisse has upgraded Boston Beer’s shares.
Getty Images/Justin Sullivan
Boston Beer is brewed in Boston, Massachusetts.
After receiving an upgrade from Citigroup, the shares jumped early Wednesday.
Credit Suisse is a financial institution based in Switzerland.
Thank goodness for hard seltzer. Analyst Kaumil Gajrawala lifted his price objective on Boston Beer (ticker: SAM) to $1,490 from $1,304, stating that “the firm is best positioned to manage the ‘new rules’ of the hard seltzer category.”
In recent trade, Boston Beer rose 2.9 percent to $954.48. Although the stock is down 6.7 percent year to date, it has gained roughly 58 percent in the last year. Hard seltzer has gained popularity in recent years, and Boston Beer’s Truly brand has been at the forefront of the genre. The other big player, White Claw, is privately owned. And, despite the fact that these products’ success has garnered greater attention and competition, Truly has remained a winner for Boston Beer, resulting in high analyst confidence.
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Many analysts have attempted to estimate how large a share of the beer industry seltzer can command, but Gajrawala believes this is the wrong approach: Hard seltzer, on the other hand, he believes might account for 10% of total alcoholic beverages by 2025, up from 3.5 percent currently. That means there’s still a lot of room for the industry to grow. White Claw’s white-hot growth has moderated a little, but hard seltzer is still rising in the triple digits. Gajrawala says that Truly is at the tip of the spear, increasing market share and gaining ground on White Claw. Another appealing potential is the economy’s reopening as the Covid-19 issue improves. Consumers are becoming more familiar with the beverages, placing pressure on bars and restaurants, particularly industry leaders like Truly, to include them on their menus. “The reopening will enable sample opportunities as well as live events/sponsorship opportunities for seltzer that have never existed before,” he says. Teresa Rivas may be reached at teresa.rivas@barrons.com./n
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