Constellation Brands, Inc. (NYSE: STZ) looks like it is in trouble after falling nearly 17% after its earnings and guidance disappointed investors. After seeing a multi-year low of $181.81, the stock has managed to recover a few dollars of the nearly $40 per share that was lost on the earnings report. What is surprising is that Wall Street’s sentiment has not turned into a scenario that would force investors into endless binge-drinking sessions.
Some analysts have downgraded Constellation Brands and cut their expectations. Despite the negativity in most reports, there are plenty of analyst reports which are still maintaining positive ratings even if they are cutting their respective price targets.
The opinions and targets mentioned in this report are assigned to each of the firms which have made the calls. Oggonomics does not maintain in-house price targets or formal ratings on this company.
Oggonomics has outlined many of the current issues impacting beer, wine and spirits currently. These may be upsetting a decades old belief that beer and alcohol sales are immune to the economy.
CFRA (S&P) has maintained its Buy rating and $275 to reflect Constellation as the best way to play the theme of imported beer continuing to take away market share from domestic brands here in the U.S. It still expects net sales to increase by about 3% in 2025 and another 6% in Fiscal Year 2026. That would be driven on a 5% increase in beer sales being partially offset by 7% lower sales in the much smaller Wine/Spirits segment.
Constellation Brands was maintained as Overweight at Morgan Stanley, but the firm did still slash its 12-month price target down to $220 from $280 in the call. Despite cutting earnings and long-term growth forecasts, Morgan Stanley is sticking with its thesis that the compressed valuation and still having solid long-term growth potential merit the Overweight rating. The report also points out that much weaker forward sequential growth is not the same thing as weak absolute growth. Morgan Stanley also cited risks from the Hispanic consumer uncertainty, California wildfires, potential tariffs should be factored in consider that its stock is down 30% from pre-election highs already.
Three other positive ratings calls have been seen with price target adjustments to reflect the lower growth:
- Needham maintained its Buy but its price target was cut to $240 from $280.
- Piper Sandler maintained its Overweight rating and cut its target to $245 from $300 in its call.
- Evercore ISI maintained its Outperform rating but cut its target down to $250 from $300 in the call.
JPMorgan is not sticking by the top adult beverages distributor. Constellation was downgraded to Neutral from Overweight and its target was slashed down to $203 from $262 in JPMorgan’s call. While this call points to positive secular trends like “premiumization” and faster growth in legal-drinking age Hispanic consumers the report also cites more risks. It sees prolonged pressure on lower-income and Hispanic consumers, lower consumption of alcohol by younger drinkers, impacts from weight-loss drugs (GLP-1) and even tariff risks.
Jefferies also bailed on the company. Constellation Brands was downgraded to Hold from Buy and its price target was slashed to $201 from $310 in the Jefferies report. According to Jefferies, Constellation missed in all segments and lowered guidance — blaming a tough economy, the law of large numbers for market share, and overall trends in the wine and spirits segment. And while the stock may seem oversold with stock buybacks taking place, Jefferies feels the stock will remain at a discount until it can reaccelerate growth.
BofA Securites had already downgraded Constellation to Neutral back in October. The firm updated the post-earnings call by lowering its price objective to $205 from $250 in this refresh call. It has also lowered earnings expectations and lowered its earnings multiples that investors should pay out into Fiscal Years 2026 and 2027. The amazing part is that they are still expecting earnings per share growth of about 7% after an 11.6% expected earnings (per share) growth this year. BofA’s investment rationale lays out the caution here:
Our Neutral rating reflects our view that 1) volumes should remain muted balance of year, 2) much of this is priced in, and 3) other than opportunistic trading based on weekly data, the stock is likely to be range bound for a while.
After closing out last week at $181.81, Constellation was last seen up over 2% at $186.00 as Wall Street’s valuations are laid out.
