Microsoft shares jump after fourth-quarter earnings beat on AI-fueled cloud growth
Investing.com - Goldman Sachs has reiterated its Buy rating and $225.00 price target on Constellation Brands (NYSE:STZ), currently trading at $166.42, following the company’s first-quarter earnings report that fell short of expectations.
The alcoholic beverage company reported first-quarter earnings per share of $3.22, missing Goldman Sachs’ estimate of $3.45 and consensus expectations of $3.31. Beer depletions declined 2.6% while shipment volumes dropped 3.3%, both facing difficult year-over-year comparisons. InvestingPro data shows 12 analysts have recently revised their earnings expectations downward for the upcoming period.
Despite these underwhelming results, Constellation Brands reaffirmed its comparable fiscal year 2026 guidance. Management indicated the first-quarter performance was largely anticipated, which Goldman Sachs believes will reassure investors who feared a potential guidance cut.
Goldman Sachs expressed optimism that Constellation’s topline growth will accelerate as the fiscal year progresses, with potential upside to what it views as conservative guidance from management. The firm noted that on a same-day adjusted basis, beer depletions were down only 1.2%.
The investment bank highlighted Constellation’s current valuation, trading at a 15% discount to alcohol industry peers on a forward P/E basis, well below its three-year historical average discount of 1%. With a market cap of $29.44B and a dividend yield of 2.45%, InvestingPro analysis indicates the stock is currently undervalued, supporting Goldman Sachs’ view. The platform offers 8 additional key insights about Constellation Brands in its comprehensive Pro Research Report, available to subscribers. Goldman Sachs considers this valuation compelling given expectations that Constellation’s growth, while slower, will still outpace competitors and improve over time.
In other recent news, Constellation Brands is preparing to report its fiscal first-quarter earnings with UBS forecasting earnings per share of $3.15, slightly below the consensus estimate of $3.41. UBS has lowered its price target for the company to $195 while maintaining a Buy rating, citing slower consumption trends that might affect top and bottom-line growth. Evercore ISI also adjusted its price target to $210 and reduced its fiscal year 2026 earnings estimate, noting expected pressure on volume trends and beer margins. RBC Capital, however, maintained its Outperform rating with a $233 price target, expressing confidence in Constellation’s brand loyalty and market share gains despite short-term pressures. Morgan Stanley (NYSE:MS) reiterated an Equalweight rating with a $195 price target, pointing out both short-term and long-term challenges, including health trends and competition. Meanwhile, Constellation Brands saw a slight stock increase following reports of potential changes in U.S. drinking guidelines, which could favor the alcohol industry. The company continues to face macroeconomic headwinds and competition, but analysts suggest these factors are already reflected in its current valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.