Goldman: Sell This Flat Beer Stock

Near-term SAM options traders are unusually put-heavy

Managing Editor
Apr 5, 2019 at 11:06 AM
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Boston Beer Company Inc (NYSE:SAM) is reeling this morning, last seen down 3.9% at $272.79, after Goldman Sachs slammed the beer stock with a downgrade to "sell" from "neutral," and a price-target cut to $245 to $270. The firm said its sees increasing competition negatively impacting sales growth for SAM, and prefers rival Constellation Brands (STZ), which posted an impressive earnings beat after yesterday's close. 

Today's downgrade is far from a surprise for Boston Beer stock. Coming into today, six of the seven covering firms sported "hold" or "strong sell" ratings. Plus, SAM's average 12-month target price of $278.58 is relatively underwhelming, as it comes in flat with current trading levels.     

Digging deeper, the equity's Schaeffer's put/call open interest ratio (SOIR) of 2.03 ranks in the 95th annual percentile. This suggests that near-term options traders are more put-biased than usual right now, with peak open interest currently found at the out-of-the-money April 300 put.

On the charts, SAM entered 2019 trading near $240, and eventually topped out at north of $320 in mid-March. Boston Beer stock has been pulling back since, and breached short-term support at its 200-day moving average earlier this week. Today's drop has the equity testing the $270 region, home to its 80-day moving average and a its late-February pre-bull gap levels.

 

 

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