Investing.com -- Analysts at TD Cowen have downgraded their ratings of Constellation Brands (NYSE:STZ) and Anheuser Busch Inbev (EBR:ABI).
In a note to clients lowering their ratings of the stocks to "Hold" from "Buy" on Tuesday, the analysts said beverage giant Constellation is seeing "broader pressures" in its beer business and Bud Light-maker AB InBev is facing ongoing demand headwinds in the US and China.
Constellation, known for its Corona beer, has slashed its annual net sales growth outlook to between 4% to 6%, compared to an earlier range of 6% to 7%. The TD Cowen analysts suggested the announcement demonstrates that the firm's 2026 fiscal year results could also be at "risk."
Although Constellation's beer business helped offset a slump in its wine and spirits division, the analysts flagged that the company is "not immune" to declines in the category.
"Management attributed the deceleration to rising unemployment among its Hispanic consumers, which they think will reverse next year. But given that unemployment rates are still quite low compared to history, we take a more conservative view," the analysts argued.
Meanwhile, AB InBev recently posted volumes and revenue that missed estimates in its second quarter. The world's biggest brewer also reiterated its annual forecast for core profit growth of 4% to 8%, but flagged headwinds from weather and adverse economic conditions in some of its markets.
Volumes in the US, which were hit by a boycott of its Bud Light brand in 2023, are tipped to have declined by 2.5% over the last twelve weeks year-on-year, the TD Cowen analysts said, citing their tracking data.
Elsewhere, "China has been negative all year due to macro[economic] pressure, despite exposure to the relatively insulated super-premium segment," the analysts added.
Sales in Mexico have come also been dented in the near term by cutbacks in government subsidies and unfavorable rainy weather in the July-August period, they wrote.
(Reuters contributed reporting.)