Boston Beer Company (SAM) Stock Surges on Strong Q3 Results and Hard Mtn Dew Potential
Boston Beer Company, Inc. (NYSE: SAM), the brewer behind popular brands like Samuel Adams and Truly Hard Seltzer, has seen its stock rise after reporting a strong third-quarter performance. The company’s net revenue grew 0.6% to $605.5 million, and its gross margin expanded by 60 basis points year-over-year to 46.3%.
This positive performance has fueled optimism among analysts, particularly regarding the potential of Hard Mtn Dew, the company’s new alcoholic beverage developed in partnership with PepsiCo. Piper Sandler analyst Michael S. Lavery, who has an Overweight rating on SAM stock, increased his price target to $330 from $325, citing the anticipated growth from Hard Mtn Dew’s national rollout in 2025.
Despite transition challenges that were more significant than expected, Hard Mtn Dew sales did increase in the third quarter. Lavery believes the company is well-positioned to maintain its shelf space during the crucial Spring 2025 resets, a marked improvement from a 4% decline in 2024. This improvement has been driven by replacing some underperforming Truly Hard Seltzer SKUs with new offerings like Truly Unruly and Twisted Tea Extreme, both boasting an 8% ABV compared to the original line’s 5% ABV. Notably, these new products, especially those with a higher alcohol by volume (ABV), have demonstrated strong performance.
Lavery further highlights the potential for Hard Mtn Dew to generate substantial sales, estimating a range of $150 million to $300 million by 2025, although his current projection sits just under $100 million. This potential stems from the product’s success in its limited distribution area, indicating strong consumer interest.
In addition to the optimistic outlook for Hard Mtn Dew, Lavery raised his 2024 EPS estimates from $8.50 to $9.40 and his FY25 EPS estimates from $11.75 to $12.
RBC Capital Markets Maintains Positive View on SAM
RBC Capital Markets analyst Nik Modi reiterated his Sector Perform rating on SAM stock, with a price target of $318. Modi acknowledges that the company is effectively managing its operations, leading to margin expansion despite year-over-year volume declines. While he recognizes the ongoing challenges with volume growth as 2025 approaches, he expects modest gains primarily from Twisted Tea. While Sun Cruiser is viewed as promising, Modi considers Truly Hard Seltzer a work in progress.
Reflecting his confidence in the company’s future performance, Modi raised his FY25 adjusted EPS estimate from $11.00 to $11.21.
SAM Stock Performance
As of Friday’s close, SAM shares were trading higher by 0.25% at $302.62. The stock’s upward trajectory suggests investor confidence in the company’s strategy and growth prospects, particularly driven by the potential of Hard Mtn Dew and its expanding product portfolio.