Boston Beer hopping after analyst raises rating
NEW YORK (AP) — Boston Beer's stock was hopping Wednesday, after a Goldman Sachs analyst boosted the brewer's rating and price target, thanks in part to the success of its Angry Orchard cider.
THE SPARK: Goldman's Judy Hong lifted Boston Beer Co. to "Neutral" from "Sell" and increased its price target to $162 from $141.
THE BIG PICTURE: Boston Beer, whose other brands include Samuel Adams and Twisted Tea, sold 2.7 million barrels of beer in 2012, a gain of nearly 11 percent from 2011, and reported an 18 percent volume jump for the first three months of 2013. But net income fell both last year and in the first quarter, in part reflecting higher costs and heavier advertising. The non-beer businesses, particularly the cider, have contributed significantly to the volume growth, as its beer brands faced heavy competition from craft beers in recent years.
THE ANALYSIS: Hong said in a client note that she underestimated how successful Angry Orchard cider would be for Boston Beer. In its first year, Angry Orchard has grabbed a more than 40 percent share of the cider segment. Hong predicts it will comprise 20 percent of Boston Beer's volume by 2015's end.
New Samuel Adams products — including the introduction of some Samuel Adams beer cans — may also lift near-term volume, she added.
A representative for Boston Beer did not immediately respond to an email seeking comment.
SHARE ACTION: Shares of Boston Beer gained $9.61, or 6.1 percent, to $166.10 in morning trading. It's traded in a range of $97.66 to $172.05 over the past year. Year-to-date, the stock is up 16.4 percent.