UBS downgrades Treasury Wine stock to Neutral as guidance withdrawn

Investing.com - Treasury Wine Estates Ltd. (ASX:TWE) has been downgraded by UBS from Buy to Neutral with a significantly reduced price target of AUD6.50, down from AUD10.00 previously. The stock, currently trading near its 52-week low, has seen its share price decline by over 44% in the past year, according to InvestingPro data.

The downgrade follows Treasury Wine’s decision to withdraw its fiscal year 2026 guidance at the Group, Penfolds, and Americas levels, while also pausing its share buyback program after completing only AUD30.5 million of the planned AUD200 million repurchase.

UBS has revised its earnings per share estimates downward by 22% for FY26 and 29% for FY27, citing lower expected volumes and reduced EBITS margins across the company’s Americas, Penfolds, and Collective divisions.

The investment bank noted increased earnings uncertainty for Treasury Wine’s two key divisions, with demand in China becoming less predictable and reallocation prospects more challenging, while structural headwinds persist in the Americas market.

Despite Treasury Wine’s shares falling 48% in calendar year 2025 compared to the ASX100’s 7.5% gain, and its FY26 estimated P/E multiple contracting from 17x at the start of 2025 to 12x currently, UBS believes the risk-reward balance now appears neutral. According to InvestingPro analysis, the stock appears undervalued at current levels, with additional metrics and insights available to subscribers, including 8 more ProTips and detailed financial health scores.

In other recent news, Treasury Wine Estates has seen a revision in its stock price target by Jefferies. The firm has lowered the target from AUD10.00 to AUD8.50, although it continues to maintain a Buy rating for the company. This adjustment reflects ongoing challenges that Treasury Wine Estates is experiencing in China, as well as distributor disruptions in the United States. These issues have been acknowledged by Jefferies as already known to the market. The company’s performance and strategic adjustments remain under scrutiny by analysts. This recent development highlights the importance of staying informed about market dynamics and company-specific challenges. Investors are advised to consider these factors when evaluating the company’s potential.

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