First Brands Group debt targeted by Apollo Global Management - report
Investing.com - Constellation Brands (NYSE:STZ) stock fell to $146.49, down over 30% year-to-date, after TD Cowen lowered its price target to $152.00 from $180.00 while maintaining a Hold rating due to weakening beer sales. According to InvestingPro analysis, the stock appears undervalued at current levels.
The alcoholic beverage company revised its beer organic growth forecast downward to -4% to -2%, a significant reduction from its previous guidance of flat to +3% growth, citing continued subdued consumer demand. InvestingPro data shows analysts expect an overall revenue decline of 8% this fiscal year, with analyst price targets ranging from $123 to $247.
TD Cowen noted that management’s guidance had depended on sequential improvement in the second quarter, which failed to materialize. The firm’s tracking indicated Constellation’s second-quarter beer sales and volumes declined -1.1% and -2.9% quarter-to-date through August 23, compared to 0.5% and -1.3% in the first quarter, respectively.
Constellation continues to attribute the slowdown to macroeconomic pressures affecting Hispanic consumers, resulting in lower trip frequency and reduced spending per trip. Nielsen panel data referenced by TD Cowen shows Hispanic purchase frequency down -5.0% over the past 12 weeks on a rolling 52-week basis.
Management anticipates an additional 160 basis points of EBIT margin pressure on beer in fiscal year 2026, on top of the forecast for a 20 basis point decline, with 100 basis points coming from volume deleverage and 60 basis points from tariffs, including the incremental 25% tariffs on aluminum cans, bringing the total impact to approximately $70 million. Despite these challenges, the company maintains a 2.7% dividend yield, and management has been actively buying back shares, according to InvestingPro data.
In other recent news, Constellation Brands has seen a series of analyst adjustments and corporate actions. Evercore ISI lowered its price target for the company to $170, maintaining an Outperform rating, following a guidance downgrade and industry conference presentation. Similarly, Jefferies reduced its price target to $179, citing challenges within the Hispanic consumer segment, yet retained a Buy rating. Meanwhile, TD Cowen maintained a Hold rating with a $180 price target, adjusting its fiscal 2026 earnings per share estimate to $12.62, at the lower end of the company’s guidance, due to concerns about beer margins and growth.
In corporate developments, Constellation Brands announced equity awards for CFO Garth Hankinson, with restricted and performance share units set to vest by 2028. The company also maintained an Outperform rating from Evercore ISI, despite uncertainties regarding potential tariffs on Mexican imports. These adjustments and actions reflect current market conditions and strategic decisions impacting Constellation Brands.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.