Boston Beer stock (NYSE: SAM)
On Thursday, the parent company of Samuel Adams beer reported second-quarter earnings of $4.75 per share on revenue of $603 million. Refinitiv polled analysts predicted earnings per share of $6.69 and revenue of $658 million. Sales of Truly brand hard seltzer were lower than expected due to a shift in alcohol consumption back to bars.
The miss prompted Goldman Sachs analyst Bonnie Herzog to downgrade the stock to neutral from buy on Thursday night.
“We are very surprised by the magnitude of this quarter’s miss, which came in significantly below expectations despite [managementconsistently ]’s confident tone as recently as our May 18 Global Staples Forum,” Goldman said in a client note.
Some slowing in the hard seltzer category was expected, but the second-quarter miss raises concerns about Boston Beer’s long-term growth plans and ability to forecast results, according to Goldman.
′′[Management] has low visibility in its own business — SAM has less visibility into the category (and is no longer forecasting this) as well as its own business, which contradicts its own commentary as recently as May,” according to the note.
Boston Beer’s price target has been reduced from $1,550 to $875 per share by Goldman. The new target represents a 7.7 percent drop from the stock’s closing price on Thursday.
Domino’s Pizza stock (NYSE: DPZ)
The pizza chain’s stock rose more than 14% on Thursday after the company reported better-than-expected second-quarter results. However, JPMorgan downgraded the stock from overweight to neutral, stating that there isn’t much more upside left.
“After a great run, with shares up 117% (vs. 54% for the SPX) since March 2019, we believe it is now time to lock in profits at Domino’s Pizza,” JPMorgan said in a note.
Following a slow start to the year, Domino’s stock has increased by more than 60% since early March. Over the last decade, the stock has consistently been one of Wall Street’s best bets.
JPMorgan raised its earnings forecast for the coming quarters, but said the stock remained overpriced based on historical valuations.
“A 30x forward year earnings multiple is generally at the upper end of the typical multiple range for DPZ, and at this point we don’t believe a sustained higher multiple or higher earnings relative to our optimistic assumptions warrants a risk of further upside in the stock beyond current levels,” the note stated.
JPMorgan raised its price target for the stock from $425 to $530 per share. However, because Domino’s closed above $538 per share on Thursday, the new target represents a more than 1% drop.