As analysts trim Boston Beer stock price target, should you buy or sell?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 23, 2021
  • Boston Beer shares plunged nearly 25% on Friday after the company reported weak Q2 results.
  • Analysts including Goldman Sachs, Cowen, and Deutsche Bank cut their price targets on the stock.
  • So, as SAM shares trade at the lowest level since August last year, should you buy or sell?

US beverage producer Boston Beer Company Inc. (NYSE:SAM) plunged nearly 25% on Friday after the company reported disappointing quarterly results. Furthermore, SAM’s stock price also suffered after analysts cut their price targets.

The company released its fiscal Q2 results on Thursday after markets closed, missing expectations on revenue and earnings. Its GAAP EPS of $4.75 missed estimates by $1.85. Revenue increased 33.3% Y/Y to $602.8 million but still fell short of the consensus Street by $54.85 million.

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Boston Beer also issued weaker than expected earnings guidance for full-year 2021. The company’s EPS estimate in the range of $18.00-$22.00 is below the Street estimate of $24.00.

Goldman Sachs lowered its rating from buy to neutral, citing the surprising earnings miss. 

Analyst Bonnie Herzog said:

We are very surprised by the magnitude of this quarter’s miss, which came in well below expectations despite [the company]’s consistently confident tone as recently as our May 18 Global Staples Forum.

On the other hand, Deutsche Bank cut its price target to $850 from $1,074, while Cowen’s new price target is $825, down from $1,300.

Is it too late to sell Boston Beer stock?

Boston Beer shares trade at a P/E ratio of 36.73 after Friday’s pullback. Its forward P/E ratio also fell significantly to 20.16, making the stock an attractive option for value investors. In addition, analysts expect Boston Beer to post earnings growth of about 73% this year and 33% next year. They also forecast a 5-year annual EPS growth rate of approximately 38.67%, making SAM shares compelling to growth investors.

Therefore, with the stock price falling to about $703 per share, well below Deutsche bank’s and Cowen’s price targets, it may be too late to sell.

Source – TradingView

Technical overview: Boston Beer stock price forecast for Q3

Technically, Boston Beer shares appear to have created a downward price gap following Friday’s plunge. The stock price has now entered oversold conditions in the 14-day RSI. And since it is already below the latest price targets from leading Street analysts, a rebound could be imminent. 

Therefore, investors can target potential rebounds at $815.95 or higher at $908.69. The key support levels are $627.74 and $524.09.

Bottom line: the catalyst for buying the SAM stock price rebound

Boston Beer’s 25% stock price decline could be overblown after analysts quickly followed Thursday’s surprising earnings miss with a significant reduction in the SAM price targets. The stock is now trading well below the new price targets creating a perfect opportunity for a rebound. Therefore, it may be too late to sell. But investors can reduce losses by buying the rebound.

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