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Investing.com - Evercore ISI lowered its price target on Constellation Brands (NYSE:STZ) stock to $210.00 from $225.00 on Monday, while maintaining an "In Line" rating on the beverage company. The stock, currently trading near its 52-week low of $159.35, has declined over 27% in the past six months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.
The research firm reduced its fiscal year 2026 earnings estimate from $12.75 to $12.60 per share, citing expected pressure on volume trends. Evercore ISI now models beer depletions down approximately 0.5% for the fiscal year, with stronger performance anticipated in the second half compared to the first half due to easier comparisons. InvestingPro data reveals that 8 analysts have recently revised their earnings estimates downward, though the company maintains strong fundamentals with an EBITDA of $3.96 billion.
Beer margins are expected to contract slightly, down about 10 basis points, as weaker fixed cost leverage and higher aluminum costs are partially offset by a weaker peso and cost savings. The firm noted that marketing spend is expected to skew toward the first half of fiscal 2026 as Constellation returns to a more normal cadence.
Evercore ISI expects this marketing spend timing to pressure first-quarter results more than currently modeled by Wall Street, though it should support better margin trends in the second half. The firm highlighted that aluminum tariffs, now at 50%, remain an overhang for the company.
The research firm projects organic sales declines of approximately 1% versus the company's outlook of down 2% to up 1%, with beer organic sales estimated at +0.6% compared to the company's +0-3% outlook, and wine and spirits organic sales at -19% versus the company's -20% to -17% guidance.
In other recent news, Constellation Brands has been the focus of several notable developments. Bernstein SocGen Group reiterated its Outperform rating on the company, maintaining a price target of $225.00, while highlighting potential challenges related to the Hispanic consumer market, which makes up a significant portion of Constellation's customer base. Despite these concerns, Bernstein remains optimistic about the company's growth potential. Meanwhile, Piper Sandler adjusted its price target for Constellation Brands to $170, up from $165, while maintaining a Neutral rating. This revision comes in light of Constellation's recent $900 million debt tender and expected cost savings from a recent divestiture in its Wine & Spirits segment. Additionally, BofA Securities lowered its price target to $180 from $195, citing concerns over demand trends and social factors affecting the company's core consumers. Despite the downgrade, BofA maintained a Neutral rating, noting that much of the negative sentiment is already reflected in the stock. These developments come as Constellation navigates a complex market environment with both challenges and growth opportunities.
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