Two National Guard members shot near White House
Investing.com - Piper Sandler reduced its price target on Constellation Brands (NYSE:STZ) to $135.00 from $155.00 on Friday, while maintaining a Neutral rating on the beverage alcohol company. The stock currently trades at $130.45, down 39.47% year-to-date and near its 52-week low of $126.45. According to InvestingPro analysis, Constellation Brands appears undervalued based on its Fair Value assessment.
The firm cited increasing pressure from GLP-1 weight loss drugs as a key factor in the downgrade, noting that recent price reductions for these medications have likely increased user adoption. Piper Sandler estimates this trend could create an additional 30-70 basis point annual headwind to U.S. alcoholic beverage sales, compounding beer’s current negative 4.7% category momentum.
The research firm also identified higher alcohol by volume (ABV) beverages as another challenge, potentially causing approximately 1 percentage point or more of volume pressure, with more category innovation expected in this segment. Despite these headwinds, InvestingPro data shows Constellation maintains a 3.13% dividend yield and has raised its dividend for 11 consecutive years, potentially offering some stability for income-focused investors.
As a result, Piper Sandler lowered its Beer volume growth estimate by approximately 1.0 percentage point for Constellation’s fiscal fourth quarter 2026, and by approximately 1.5 percentage points each quarter beginning in fiscal first quarter 2027. The firm also reduced its Wine & Spirits volume growth estimate by approximately 0.5 percentage points quarterly starting in fiscal first quarter 2027.
The revised outlook prompted Piper Sandler to decrease its fiscal 2027 earnings per share estimate from $12.80 to $12.35, while applying a lower multiple of approximately 11 times calendar 2026 estimated EPS, down from the previous 12 times multiple, reflecting the weaker category outlook. Constellation currently trades at a P/E ratio of 19.03, with management actively buying back shares. InvestingPro has identified 10 additional investment tips for Constellation Brands, available with a subscription, along with a comprehensive Pro Research Report that provides deeper analysis of the company’s fundamentals.
In other recent news, Constellation Brands reported second-quarter earnings per share of $3.63, surpassing TD Cowen’s above-consensus estimate. Despite this earnings beat, the firm noted a 2.7% decline in depletions, which was less severe than the projected 4.5% drop. In a strategic financial move, Constellation Brands terminated a $500 million credit line with no outstanding borrowings or early termination penalties. Concurrently, the company issued $500 million in senior notes due in 2035, with a public offering price of 99.716% of the principal amount.
Analysts at JPMorgan have assumed coverage of Constellation Brands with a Neutral rating, citing long-term potential but acknowledging near-term market challenges. Meanwhile, TD Cowen has adjusted its price target for the company to $144.00 from $152.00, maintaining a Hold rating. Constellation Brands also filed for the potential resale of up to 21.3 million shares of its Class A Common Stock by certain selling stockholders, though it will not receive any proceeds from this transaction. These developments reflect ongoing strategic and financial maneuvers by Constellation Brands in the current market landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.