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Investing.com - TD Cowen has lowered its price target on Constellation Brands (NYSE:STZ) to $144.00 from $152.00 while maintaining a Hold rating on the stock. The move comes as the company’s shares have declined over 21% in the past six months, with InvestingPro data showing the stock currently trades below its Fair Value.
The alcoholic beverage company reported second-quarter earnings per share of $3.63, exceeding TD Cowen’s above-consensus estimate, while depletions declined 2.7%, better than the firm’s projected 4.5% drop. The company maintains strong profitability with a 51.9% gross margin and healthy cash flows, according to InvestingPro data.
Constellation management expressed "cautious optimism" that sales trends are "bottoming out," though TD Cowen noted its tracking data indicates sales declines have continued at a steady rate, particularly among core Hispanic consumers.
The firm highlighted that while distribution continues to expand for Constellation products, this positive factor is being more than offset by velocity declines of 8-9%.
TD Cowen raised its fiscal year 2026 earnings per share estimate to $11.57, which is three cents below the high end of Constellation’s guidance, while the new $144 price target reflects a 12x price-to-earnings ratio on forward next-twelve-months earnings, in line with the stock’s current valuation.
In other recent news, Constellation Brands reported its second-quarter fiscal 2026 earnings, surpassing expectations with earnings per share of $3.63 compared to the consensus estimate of $3.46. The earnings beat was largely attributed to better-than-expected beer profits, which contributed approximately $0.14 to the EPS outperformance due to greater cost savings. However, the company reported revenue of $2.48 billion, falling short of the anticipated $2.51 billion. Despite the revenue miss, investor sentiment appeared positive following the earnings release.
Analyst firms have maintained their favorable outlook on Constellation Brands. Bernstein SocGen Group reiterated its Outperform rating with a price target of $195, focusing on potential impacts of immigration policy on sales volumes. RBC Capital also reaffirmed its Outperform rating with a $200 price target, noting strong beer margins despite volume challenges. BMO Capital echoed this sentiment, maintaining an Outperform rating and a $190 price target, highlighting the company’s solid quarterly performance. These recent developments reflect ongoing confidence in Constellation Brands amidst broader market challenges.
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