12:32 PM EDT, 06/05/2024 (MT Newswires) -- Boston Beer's ( SAM ) stock decline year to date presents the company with "a more balanced risk/reward" and recent reports of merger talks could spur a strategic halo to the company's shares, Morgan Stanley said in a Wednesday note as it upgraded Boston Beer ( SAM ) to equal-weight from underweight.

The investment firm said Boston Beer's ( SAM ) stock is down about 12% year to date, weighed down by volume issues and weakness in beer and broader beverage categories from April to May. The company could still be "strategically attractive" to a party that looks to expand in the US beer market given Boston Beer's ( SAM ) distributor relationships and innovation capabilities, Morgan Stanley noted.

According to the note, Boston Beer ( SAM ) stock rose after The Wall Street Journal reported on May 31 that the company is in early talks over a merger and acquisition transaction with Suntory. On Tuesday, the paper reported that Green Thumb Industries Chief Executive Officer has indicated interest in starting merger talks with Boston Beer ( SAM ), also leading to a modest stock increase.

Any transaction, however, will need the support of founder, chairman, and controlling shareholder Jim Koch, who appeared "averse" to the company's sale historically, Morgan Stanley said.

Morgan Stanley lowered its 2024 and 2025 estimates for Boston Beer's ( SAM ) earnings per share, citing recent volume weakness and increasing commodity costs.

Price: 303.20, Change: +4.79, Percent Change: +1.61