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Boston Beer Co.'s shares fell Monday following a downgrade by a UBS analyst who sees slower growth ahead for the brewer.
THE SPARK: Boston Beer has shown solid growth with new products such as Twisted Tea and seasonal drinks. But UBS analyst Kaumil Gajrawala downgraded his rating on the company's shares to "sell" from "neutral" on Monday, saying the company's growth may slow as its innovations age.
The company's newest products will need to match their predecessors' impact to maintain Boston Beer's growth trends.
THE BIG PICTURE: Boston Beer has long been known for its Samuel Adams beer. But, like many brewers, it has had to innovate to cope with softer beer sales across the country during the economic downturn. And it now suffers from the "innovators curse," Gajrawala wrote: The company must continue to innovate to maintain its growth rate.
THE ANALYSIS: Gajrawala said 70 percent of Boston Beers recent revenue growth has come from Twisted Tea and seasonal products.
Without more of the same, he expects the company's sales to grow more slowly. So he lowered his forecasts for Boston Beer's volume growth and 2013 earnings but kept his price target for the shares at $103.
SHARE ACTION: Shares of Boston Beer fell $5.64, or 4.5 percent, to $118.75 by midday. That's still well above the mid-point of their range over the past 52 weeks from $71 to $128.07, however.