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Boston Beer Jumps as Cowen Upgrades Price, Rating

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By Dhirendra Tripathi – Boston Beer stock (NYSE:SAM) climbed over 7% Monday as Cowen upgraded it to market perform with a $500 target.

The brokerage earlier had an underperform with a $400 target for the stock.

The stock touched a high of $493.77 in the session still underway, having more than halved since July 1.

According to Cowen, with Nielsen trends reflecting signs of stabilization, lower expectations are now priced into the stock.

After first trimming its annual guidance in July, the brewer lowered it again in September as sales of hard seltzers worsened.

In a note to the Securities and Exchange Commission around three months ago, Boston Beer said the market for hard seltzer products had continued to decelerate. The company said it expected to incur hard seltzer-related inventory write-offs, shortfall fees payable to third-party brewers, and other costs that will be expensed during the remainder of the financial year.

Sales of hard seltzers were strong in the pandemic and the company stocked up to meet demand that it expected to only rise. A rude shock awaited the company as on-premise demand for hard seltzers was much slower than at-home consumption as the economy reopened. That outcome left it with huge inventory the company was forced to account for in the second and third quarters.

The company closed the third quarter in the red compared to a profit a year ago.

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