Bernstein cuts Constellation Brands target to $225, keeps Outperform

On Wednesday, Constellation Brands (NYSE:STZ) stock, currently trading at $183.40, received a revised price target from Bernstein SocGen Group, with analysts setting it at $225.00, a decrease from the previous $260.00, while maintaining an Outperform rating. According to InvestingPro data, analyst targets for the stock range from $165 to $300, with 9 analysts recently revising their earnings expectations downward. The adjustment comes after the company reported its fourth-quarter fiscal year 2025 results and held a meeting with the sell-side group. Although a conference call is scheduled for Thursday at 10:30 am ET, which could provide further insights, the current analysis reflects existing uncertainties that have affected the stock, such as tariffs, scanner data, and concerns over the spending power of US and Hispanic consumers.

The company surprised many by providing detailed guidance despite the challenges. The guidance highlighted a lower forecast for beer sales in fiscal years 2026 and 2027-28, which takes a conservative view regarding the improvement in consumer behavior amidst current economic pressures. However, the report also conveyed some positive developments, including the absence of significant tariff-related obstacles, the sale of primarily mainstream wine brands for approximately $900 million, and the authorization of a $4 billion share buyback program over the next three years. The company maintains strong financial health with an overall "GOOD" rating from InvestingPro, supported by a consistent dividend growth of 13.5% and a current yield of 2.2%.

In response to the latest financial disclosures and market conditions, Bernstein analysts have reduced their earnings per share (EPS) estimate for Constellation Brands by approximately 9% for fiscal year 2026. The revised price target reflects a blend of caution and optimism, acknowledging the significant uncertainty that continues to hover over the company's performance in the market. InvestingPro analysis reveals that while the company is trading at a high earnings multiple, it has maintained its dividend increase streak for 10 consecutive years. For deeper insights into Constellation Brands' valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Constellation Brands reported notable developments impacting its business and future outlook. The company exceeded expectations in both revenue and earnings per share for its fiscal year, reaching the higher end of its updated EPS guidance for fiscal year 2025. In a strategic move, Constellation Brands agreed to sell a portion of its wine portfolio, including mainstream brands like Woodbridge, to The Wine Group, with the transaction expected to close after the first fiscal quarter of 2026. Analysts from Goldman Sachs and RBC Capital have maintained positive ratings on the stock, with Goldman Sachs setting a price target of $260 and RBC Capital at $289, despite some concerns about future guidance and compliance with trade agreements.

UBS, however, reduced its price target to $205 while maintaining a Buy rating, citing uncertainties around tariffs and market conditions. Constellation Brands is also undergoing organizational restructuring to achieve significant cost savings by fiscal year 2028. The company plans to focus on higher-end wine and spirits offerings and intends to leverage cost savings to counterbalance tariff impacts without increasing beer prices. Additionally, Constellation Brands is scaling back its Diversity, Equity, and Inclusion efforts, including ending participation in certain advocacy initiatives. These changes reflect the company's ongoing strategy to optimize performance across its beer, wine, and spirits sectors while navigating external economic challenges.

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