Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, Evercore ISI analysts lowered the price target for Brown Forman (NYSE:BFb) (NYSE:BF-B) stock to $30 from $38, maintaining an In Line rating. The decision comes after the company’s recent results and outlook fell below expectations, with consumer pressure affecting category trends.
The analysts noted that U.S. spirits trends are currently declining by more than 3%, a drop from the earlier 1-2% decrease reported earlier in the year. Brown Forman’s forecast of a low single-digit percentage organic sales decline for fiscal year 2026 reflects a cautious approach, assuming that trends from the fourth quarter continue without any improvement in consumer spending.
The analysts highlighted that structural changes in the U.S. spirits market, including increased competition from companies like Sazerac and Gallo, could add pressure on Brown Forman. The company has been losing market share in whiskey and tequila, with whiskey losses primarily attributed to Sazerac’s success.
Consumer spending trends are also shifting, with management noting that consumers are prioritizing spending on experiences. Additionally, there is an increase in coupon redemption rates and a notable growth in sales of smaller bottle sizes, such as 375ml and 50ml. This trend is observed in both the U.S. and Europe, despite Europe not having legal cannabis or significant GLP-1 use.
While consumer pressure is impacting demand, Evercore ISI remains concerned about the structural changes in the category, as previously outlined in their reports.
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