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Bernstein SocGen Group reiterated its Outperform rating and $225.00 price target on Constellation Brands (NYSE: NYSE:STZ) Monday, while highlighting potential headwinds related to the Hispanic consumer market. The $29.17 billion beverage giant’s stock currently trades near its 52-week low of $160.46, with InvestingPro analysis suggesting the shares are undervalued.
The research firm noted the Hispanic consumer represents 35% of Constellation’s consumer mix and an even larger portion (50%) for its Modelo Especial brand. Bernstein identified a strong state-level correlation between Modelo Especial sales volume and the size of Hispanic populations.
Economic pressures on Hispanic consumers, who typically overindex to beer consumption and skew toward lower incomes, could impact Constellation’s super-premium portfolio amid low consumer confidence and wallet constraints, according to the analysis.
Bernstein also pointed to concerns about potential immigration policies under a second Trump administration, noting that 42% of Hispanic individuals in the U.S. worry about deportation risks for themselves or close contacts.
Despite these challenges, Bernstein maintained its positive outlook on Constellation Brands, expressing belief that the beer portfolio has further growth potential, though cautioning investors that "the source of many of the company’s challenges (and their potential solutions) lie in the Oval Office."
In other recent news, Constellation Brands has finalized the sale of several mainstream wine brands to The Wine Group, marking a strategic shift towards focusing on its higher-end wine and spirits portfolio. This divestiture includes brands such as Woodbridge and Meiomi, and is expected to improve the company’s performance in the upscale segment. Meanwhile, Constellation Brands priced a public offering of $500 million in senior notes, with the proceeds intended for general corporate purposes, including debt reduction and capital expenditures. Analysts from Truist Securities upgraded Constellation Brands’ stock rating from Hold to Buy, raising the price target to $215, citing underestimated market sentiment and the company’s strong free cash flow.
Additionally, Piper Sandler increased the company’s price target to $170, maintaining a Neutral rating, while noting financial pressures on the core Hispanic consumer base. Bernstein SocGen Group maintained an Outperform rating with a $225 price target, highlighting Constellation’s growth in the U.S. beer market, driven by brands like Modelo Especial. The company has also announced cost-saving measures following the closure of a mainstream brand divestiture, with fiscal year 2027 earnings per share estimates raised to $13.85. These developments reflect Constellation Brands’ ongoing efforts to navigate market challenges and enhance its financial performance.
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