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Boston Beer Shares Jump on 4Q Results, but Analysts Lukewarm on Outlook |
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Wednesday, 12 March 2008 |
BOSTON: Shares of Boston Beer Co. rallied to a five-month high Wednesday after the company reported fourth-quarter earnings and revenue rose above Wall Street expectations.
The stock jumped 18% to $42.25 on volume of 104,000, in line with the issue's full-day average over the past 30 days. As of Tuesday's $35.81 closing price, the shares were down about 5% year-to-date.
Wachovia commented on the results, saying signs point to continued brand strength and the incremental growth of on-trend innovation.
"While craft and better beer categories are showing some of the best growth in alcohol, the extent of Boston Beer's momentum verifies management's claim to be taking share," Wachovia said.
The broker raised its second-quarter earnings-per-share estimate to 65 cents from 63 cents and its full-year estimate to $1.80 from $1.60, reiterating an outperform rating and $40 to $42 valuation range.
Deutsche Bank maintained a hold rating on the shares, saying execution remains "solid" and guidance tends to be conservative. However, the firm remains concerned about deteriorating consumer trends and an uncertain cost outlook.
Deutsche raised its 2008 earnings-per-share estimate to $1.85 from $1.70, but cautioned that a cost benefit from Boston Beer's new brewery is unlikely until at least the fourth quarter of 2008, with potentially higher preparation costs in the interim.
Elsewhere, Banc of America called the latest quarter's results "solid," but said margin pressure is still a factor for fiscal 2008. The firm maintained a neutral rating and a 12-month price target of $38.
"Boston Beer continues to post superior volume growth, sustaining that momentum while margins improve will be key to driving the stock from here," the broker said.
Banc of America raised its 2008 earnings estimate to $1.81 a share from $1.66 a share.
Analysts polled by Thomson Financial, on average, estimate full-year earnings of $1.68 a share.
Late Tuesday, Boston Beer reported a rise in net income to $6.8 million, or 46 cents a share, from net income of $2.5 million, or 17 cents a share, a year earlier, topping the mean estimate of analysts surveyed by Thomson Financial of 35 cents a share.
Revenue for the three months ended Dec. 29, less excise taxes, increased to $92.2 million from $73.3 million in 2006, exceeding analyst forecasts of $88.9 million.
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