(Bloomberg) — Wall Street’s enthusiasm for Boston Beer Co. is fading after the sweltering summer months failed to stoke increased demand for the alcoholic-beverage maker’s hard seltzers.
In the four weeks ended Aug. 14, hard seltzer sales declined 0.4%, according to Cowen analyst Vivien Azer, who said that it was the first decline she had ever seen for the category. The seltzer slump, which Azer said is more dramatic than she had previously anticipated, prompted her to downgrade Boston Beer to underperform from market perform and slash her 12-month price target on the stock by more than half to $400 from $825. The firm now has the lowest Boston Beer price target among analysts tracked by Bloomberg.
Boston Beer shares are down as much as 7.6% on Wednesday in its biggest intraday drop in a month. The stock is down 42% this year.
Analysts were broadly positive on beer stocks including Boston Beer heading into the summer, with consumers eager to return to bars and restaurants as pandemic restrictions eased. However, that reopening boost didn’t necessarily extend to hard seltzer sales. Bloomberg Intelligence analyst Kenneth Shea predicted in a May report that the return to on-premise alcohol consumption would likely come at the “expense” of drinks often enjoyed at home, such as hard seltzers.
Cowen isn’t alone in cutting its price target on Boston Beer, which makes Truly Hard Seltzer. Goldman Sachs lowered its target to $750 from $875 on Wednesday, with analyst Bonnie Herzog citing a beer distributor survey which showed that the hard seltzer slowdown is “very real and accelerating.” Bernstein trimmed its Boston Beer target to $960 from $1,060 earlier in the week.
The average price target for Boston Beer has dropped to $907, according to data compiled by Bloomberg, which is the lowest it has been since Oct. 21. Still, the average target implies return potential of nearly 60% for Boston Beer over the next 12 months. The stock has eight buy, six hold and two sell ratings.
Last month, Boston Beer missed earnings expectations and lowered its full-year forecast, citing hard seltzer woes. The results spurred Goldman Sachs to downgrade the stock and several analysts to cut their price targets.
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