Beer stocks mixed amid new analyst ratings

Yahoo Finance's Dave Briggs and Emily McCormick look at how beer stocks are performing after Goldman Sachs downgrades Sam Adams, upgrades Coors, and reiterates its 'Buy' rating for Constellation Brands.

Video transcript

DAVE BRIGGS: With 4th of July weekend just about upon us, so, too, is beer season, or is it? The stocks may not reflect as such. Goldman downgrading Sam Adams Boston Beer Company to a sell on the soft hard seltzer market. Bud's AB struggling a little bit, too. Emily McCormick here with a look at all the beer stocks struggling a bit.

EMILY MCCORMICK: Absolutely, Dave. And if we take a look at what Goldman is actually saying, they're suggesting that perhaps it's not going to be the summer of hard seltzers. Now, Goldman Sachs is getting bearish on Boston Beer specifically because of softening demand that they're seeing for the hard seltzer category. Now, Goldman Sachs downgraded Boston Beer to sell from neutral. And the firm also said that the outlook for the hard seltzer category has recently deteriorated, especially at that Truly, again, hard seltzer, brand.

Now, as you can see here, these shares are down about 36% for the year to date, also moving lower by about 4 and 1/2% on an intraday basis. And just to go into a little bit more detail about this Goldman note and the details there, based on their checks, beer distributors said that they expect Truly sales to be around 12% this year, and for hard seltzer category sales, more broadly, to be down 8% in 2022.

Now, this is after the company already posted a market full year sales slowdown into this year and into the first quarter of this year. Boston Beer sales actually dropped 24% on the year in the fourth quarter of 2021, and by 21% in the first quarter of this year. So again, Goldman Sachs really making the case here for a potential continuation of these softening trends.

DAVE BRIGGS: So what about the others?

EMILY MCCORMICK: Well, if we take a look at what Goldman Sachs actually has to say about some of these other names, Molson Coors was actually upgraded. And we do see shares of that company moving slightly to the upside in intraday trading today. Also actually outperforming many of these other names, up about 20% for the year to date, sharply outperforming the S&P 500, we should mention as well.

And another area that Goldman has really maintained a bullishness on is Constellation. Now, this stock is still down on an intraday basis, but Goldman did reiterate their buy rating on this company as well. So potentially some bright spots here, even though, again, we did see that downgrade for Boston Beer specifically.