Boston Beer has “too much to overcome” for now as the popularity of hard seltzer fizzles out, and as it fails to innovate on new products, according to RBC Capital Markets. Analyst Nik Modi downgraded shares of Boston Beer to sector perform from outperform, saying in a Thursday note that weak sales of its hard seltzer line Truly are dragging on overall growth for the company. “While we acknowledge our downgrade could have happened earlier, it is clear to us, SAM’s volume woes have not hit a bottom just yet (we expect another downgrade to guidance),” Modi wrote. “We think it is best to sit on the sidelines until we get more comfort with volume trends and incrementality of innovation.” RBC also slashed the price target by 32%, down to $331 from $488. The new price target represents about 8% upside from Wednesday’s closing price. The downgrade comes on the back of dwindling sales of hard seltzer. This year, sales in the category are down 10%, according to RBC. In comparison, from 2018 to 2020, the hard seltzer category increased at a 217% compound annual growth rate (CAGR). The analyst said it’s not the first time that Boston Beer — the maker of Truly, Twisted Tea, Sam Adams and other beverages — has launched a successful product only to see it go through a boom and bust cycle as competition increases. Still, the analyst said Boston Beer will have to show it can deliver more exciting products to make up for the falling hard seltzer trend, and to improve the stock outlook. “In the long term, we like SAM’s ability to innovate within the broader Beyond Beer space (seltzers, FMB’s, RTD’s, & Ciders) but believe SAM will be in ‘prove it mode’ until clarity emerges regarding seltzer’s stabilization and innovation performance, both of which we believe will take time,” the note read. Shares of Boston Beer declined more than 1% in Thursday premarket trading. —CNBC’s Michael Bloom contributed to this report.