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Boston Beer Serves up Rally as Analyst Talks up Seltzer

By Yasin Ebrahim

Investing.com - Boston Beer surged on Tuesday, after Credit Suisse (SIX:CSGN) upgraded its outlook on the beverage company, forecasting its seltzer brand to rack up strong gains this year.

Credit Suisse upgraded shares of Boston Beer to outperform from neutral and lifted its price target on the stock to $525 from $400, representing more than 40% from current prices.

Boston Beer (NYSE:SAM) surged 6%.

The decline in beer consumption in the U.S., prompted Boston Beer to turn to launch an alcoholic seltzer brand Truly in 2016. The Truly brand has gone from strength to strength in a market that has seen sales more jump sharply over the past year.

With an increasing number of beer, wine and vodka drinkers making the switch to seltzer, Credit Suisse forecasts the business to double this year and grow to 8% to10% of the beer industry volume by 2023 from about 2.6% today.

Boston Beer's Truly will ride the wave of growth to become and is estimated to become 60% of Boston Beer's portfolio, totaling more than 50% of overall earnings, according to the bank.

The company's beer portfolio, meanwhile, has shown signs of steadying thanks to exposure to India Pale Ale, the primary growth segment in craft beer, has jumped from 2% to about 18% following the DogFish Head acquisition, Credit Suisse added.

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