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Investing.com - RBC Capital maintained its Outperform rating and $233.00 price target on Constellation Brands (NYSE:STZ) despite expectations of near-term pressure on beer sales. According to InvestingPro data, analysts’ price targets range from $170 to $300, with RBC’s target suggesting significant upside potential from current levels.
The firm expects beer depletions to decline by approximately 3% in the near term, citing macroeconomic pressures, cautious Hispanic consumer spending, and unfavorable weather conditions affecting the company’s performance.
Constellation Brands shares have underperformed recently as these factors have weighed on overall beer trends across the company’s portfolio of brands.
Despite these challenges, RBC Capital views these issues as "primarily cyclical/transitory" rather than fundamental problems with the business or its brands.
Conversations with distributors have reinforced RBC’s confidence in the company, highlighting strong brand loyalty and continued market share gains that position Constellation Brands favorably when consumer spending improves.
In other recent news, Constellation Brands is set to report its fiscal first-quarter earnings, with UBS forecasting earnings per share of $3.15, which is below the consensus estimate of $3.41. UBS has lowered its price target for the company to $195, maintaining a Buy rating, while Evercore ISI also reduced its price target to $210, citing expected pressure on volume trends. BofA Securities further lowered its price target to $180, maintaining a Neutral rating due to concerns over demand trends and market conditions. Morgan Stanley (NYSE:MS) reiterated its Equalweight rating with a $195 price target, highlighting both short-term and long-term pressures on beer volumes. These pressures include macroeconomic challenges, health trends, and competition from Anheuser-Busch InBev (EBR:ABI). Despite these challenges, UBS believes Constellation Brands can achieve low-single-digit organic revenue growth and mid-single-digit EPS growth over time. Evercore ISI projects organic sales declines, with beer sales showing slight growth compared to company estimates. Meanwhile, BofA notes efforts by Constellation to address demand through innovation and packaging adjustments.
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