Beer Pair Trade? Why Boston Beer Could Be Riskier Than Constellation Brands

A new report by Susquehanna analyst Pablo Zuanic focuses on two big-name alcoholic beverage stocks: Constellation Brands, Inc. STZ 1.53% and Boston Beer Co Inc SAM 2.42%. Although Susquehanna currently has Neutral ratings on both stocks, the firm sees more downside risk to Boston Beer.

Cider Weakness

Cider sales have been decelerating so far this year, and Zuanic believes that this trend may have negative repercussions for Boston Beer when it comes to its Q2 earnings report. The company’s Angry Orchard product currently has a 55 percent share of the cider market and represents about 40 percent of Boston Beer’s sales.

According to Zuanic, cider weakness may ultimately lead to a cut to Boston Beer’s volume growth guidance. The company barely met the low end of its 8-12 percent volume guidance in Q1, and extrapolation of June data implies only mid-single-digit growth.

Sales Growth At Constellation

The success of Modelo Especial is…

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