Constellation Brands stock target cut to $200 at TD Cowen

On Tuesday, TD Cowen adjusted its outlook on Constellation Brands (NYSE:STZ), reducing the price target from $240.00 to $200.00, while maintaining a Hold rating on the company’s shares. The stock, which has declined over 26% in the past six months and currently trades at $180.86, faces concerns over anticipated tariffs and a forecasted slowdown in beer consumption. According to InvestingPro analysis, the company maintains a strong dividend track record, having raised its dividend for 10 consecutive years.

TD Cowen analysts pointed to weaker consumer confidence, particularly within Constellation Brands’ core Hispanic demographic, as a key factor behind the lowered expectations for the company’s beer business. Despite these concerns, the company has maintained steady growth with revenue reaching $10.18 billion and a 3.7% year-over-year increase. This shift in consumer sentiment is expected to impact future consumption patterns.

In addition to consumption concerns, the analysts anticipate a significant headwind from planned tariffs on Mexico and Canada. These tariffs, expected to take effect on April 2, could lead to a 20% reduction in earnings per share (EPS) for Constellation Brands in fiscal year 2026.

The firm believes that Constellation Brands management will likely address these challenges in their forthcoming guidance, scheduled for April 3, 2025. InvestingPro subscribers can access detailed Fair Value analysis and comprehensive financial health scores to better evaluate the company’s current position. The analysts suggested that while investors are bracing for a reduction in EPS for fiscal year 2026, a more conservative forecast might actually be received positively, as it would mitigate near-term risks. They drew a parallel to Hershey’s stock performance, which improved after the company issued guidance accounting for a mid-30% decline in EPS for 2025 due to rising cocoa costs.

The market’s reaction to this new guidance from Constellation Brands remains to be seen. Trading at a P/E ratio of 47.83 and an EV/EBITDA of 11.44, the company’s valuation metrics will be crucial factors as investors evaluate the updated forecast and management’s strategy to navigate the anticipated economic headwinds.

In other recent news, Constellation Brands has been the subject of several analyst revisions following the imposition of a 25% tariff on Mexican imports. Bernstein analysts have lowered their price target for Constellation Brands to $230 from $300, citing the significant impact of the tariffs on the company’s earnings, as Mexican beer imports account for a substantial portion of its sales. Similarly, Piper Sandler downgraded the stock to Neutral and reduced the price target to $200, reflecting concerns over the tariffs’ effect on the company’s profit margins and retail momentum. Meanwhile, RBC Capital Markets maintained an Outperform rating with a $293 price target, suggesting that the current stock value already accounts for these tariff impacts and may present a buying opportunity for long-term investors.

Morgan Stanley (NYSE:MS) also adjusted its outlook, downgrading Constellation Brands to Equal-weight and cutting the price target to $202, due to concerns over long-term growth prospects in the beer segment. Despite these challenges, RBC Capital Markets and Bernstein maintain a positive outlook on the stock, with Bernstein noting that a resolution to the tariff situation could boost the company’s financial performance. The ongoing adjustments in analyst ratings and price targets reflect the complexities Constellation Brands faces due to trade policies and evolving market conditions. Investors will be closely monitoring how the company navigates these challenges in the coming quarters.

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