Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on Constellation Brands (NYSE:STZ) with a price target of $195.00, representing a 37% upside from the current price of $142.76. According to InvestingPro data, the stock has declined over 34% year-to-date, though analysis suggests it may be undervalued at current levels.
The firm outlined three potential scenarios for the beer maker amid immigration policy concerns. Bernstein’s analysis focuses on how current immigration rhetoric and enforcement might impact Hispanic consumers’ purchasing behaviors, which could affect Constellation’s sales volumes. The company, currently valued at nearly $25 billion, has already experienced a 5.56% revenue decline in the last twelve months.
The firm’s bull scenario suggests that if fears around immigration enforcement moderate, Hispanic consumers might resume socializing and shopping activities, potentially accelerating Constellation Brands and overall U.S. beer market volumes.
In its base scenario, which aligns with current Nielsen data and the firm’s financial models, Bernstein expects the status quo to continue with worried Hispanic consumers remaining disengaged from the category, followed by a return to standard growth algorithms next year from a lower base.
The bear scenario contemplates a significant intensification of immigration enforcement that could trigger another round of consumer disengagement from socializing, further impacting the category as currently fearful consumers also fail to return.
In other recent news, Constellation Brands reported its second-quarter fiscal 2026 earnings, surpassing expectations with an earnings per share (EPS) of $3.63, compared to the projected $3.46. This performance was largely driven by better-than-expected profit in the Beer segment, contributing approximately $0.14 to the EPS outperformance due to greater cost savings. However, the company reported revenue of $2.48 billion, which fell short of the anticipated $2.51 billion. Despite this revenue miss, RBC Capital and BMO Capital both reiterated their Outperform ratings for Constellation Brands, with price targets set at $200.00 and $190.00, respectively. RBC Capital noted that the quarter was solid given the muted expectations and poor investor sentiment, highlighting strength in beer margins despite volume pressures. These developments reflect ongoing challenges in beer depletions due to macroeconomic factors. The positive earnings surprise and analyst support indicate a favorable outlook from these firms.
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