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Investing.com - UBS maintained its Buy rating and $195.00 price target on Constellation Brands (NYSE:STZ) despite the alcoholic beverage company reporting weaker-than-expected first-quarter results. Currently trading at $170.92, significantly below its 52-week high of $264.45, InvestingPro data suggests the stock is currently undervalued.
The beer maker’s first-quarter earnings per share fell short of Wall Street expectations, primarily due to softer beer sales and lower operating profit margins, according to UBS. This aligns with InvestingPro data showing 12 analysts have recently revised their earnings expectations downward, though net income growth is still expected this year.
Constellation Brands reiterated its full-year guidance despite the challenging first quarter, which UBS noted would likely be viewed as "better-than-feared in isolation" by investors.
UBS highlighted ongoing investor concerns about Constellation’s top-line trajectory amid a softer beer category and weaker consumer environment, particularly among the Hispanic demographic.
The investment firm cautioned that many investors might view the company’s outlook as optimistic given the challenging start to the fiscal year and current market tracking data, potentially leading them to adopt a "wait and see approach."
In other recent news, Constellation Brands reported its first-quarter earnings, revealing a notable earnings per share of $3.22, which fell short of both Goldman Sachs’ estimate of $3.45 and the consensus expectation of $3.31. Despite the earnings miss, the company reaffirmed its fiscal 2026 guidance, which has been viewed positively by analysts like Goldman Sachs, who see potential upside in the company’s future performance. Bernstein also reiterated an Outperform rating, citing that the company’s beer depletions of -2.6% were slightly better than expected. Evercore ISI maintained its Outperform rating with a focus on the company’s strategic marketing efforts around sports events. Meanwhile, RBC Capital and Morgan Stanley (NYSE:MS) have highlighted ongoing challenges, such as macroeconomic pressures and changing consumer preferences, but RBC remains optimistic about the brand’s market share gains. Morgan Stanley pointed out long-term challenges, including health and wellness trends and competition from cannabis, but noted that these factors are already reflected in the company’s valuation. Overall, the sentiment among analysts remains cautiously optimistic despite the near-term hurdles faced by Constellation Brands.
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