On Monday, TD Cowen's analysts maintained a Hold rating on the stock. The adjustment follows the company's third-quarter results, which did not meet expectations despite a significant increase in marketing efforts.
Constellation Brands (NYSE:STZ) had previously reduced its beer guidance three months ago but remained optimistic that a 29% increase in marketing during the third quarter would bolster retail sales trends. However, the anticipated improvement in sales did not materialize.
The firm revised their outlook on Constellation Brands (NYSE:STZ) shares, lowering the price target to $240 from the previous $260. Management pointed to several factors affecting performance, including a prolonged trend of value-seeking behavior among consumers, concerns around Hispanic unemployment, a slowdown in growth for Modelo Chelada linked to its exposure to convenience stores, and intensified price competition in the light beer segment.
TD Cowen's analysts highlighted that while tracking data indicates a volume recovery in the light beer category, this rebound may be contributing to a market share slowdown for Constellation's leading full-calorie premium beers, Modelo Especial and Corona Extra. The company's strategic efforts in marketing have not translated into the expected sales growth, leading to the revised price target.
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