BF.B: Share Repurchases And Dividend Increases Will Support Long-Term Upside Potential

Analysts have modestly reduced their price target on Brown-Forman from about $39.27 to $37.43, reflecting a slightly higher discount rate despite firmer expectations for revenue growth, margins, and long term valuation multiples amid a still challenging U.S. spirits backdrop.

Analyst Commentary

Recent Street research on Brown-Forman reflects a mixed backdrop for U.S. spirits, but bullish analysts highlight that the company is still well positioned to outperform peers over the medium term. While some price targets have been trimmed at the margin, supportive ratings underscore confidence in the durability of the franchise and the potential for valuation upside as category trends stabilize.

Even as volume pressures persist in the U.S., bullish analysts emphasize that Brown-Forman's core brands, disciplined pricing strategy, and exposure to premium categories offer a foundation for continued revenue growth and margin resilience. They also see room for multiple expansion once investor concerns about the broader spirits slowdown begin to ease.

These views suggest that, despite near term industry headwinds, Brown-Forman's execution and long term growth algorithm remain intact, leaving the shares attractive for investors willing to look beyond current category volatility.

Bullish Takeaways

• Bullish analysts view the maintained positive ratings, even alongside modest target reductions, as a sign that long term earnings power and brand strength are not materially impaired, supporting upside to current valuation over time.
• There is confidence that Brown-Forman can leverage premiumization, mix improvement, and disciplined cost control to sustain healthy margins, positioning the company to benefit disproportionately when U.S. spirits trends normalize.
• Supportive views highlight the company's global footprint and portfolio breadth as key growth drivers that can offset softer U.S. demand, reinforcing the case for steady top line expansion and attractive cash generation.
• Some bullish analysts see the recent share price weakness, driven by broader industry concerns, as creating a more compelling entry point for a high quality compounder with proven execution and clear long term growth catalysts.

What's in the News

• Board authorizes a new share repurchase program of up to $400 million, effective through October 1, 2026, signaling confidence in long term value creation (Key Developments).
• Completion of a buyback tranche totaling 9,543,230 shares, or 2.02% of shares outstanding, for $265.8 million under the October 2, 2025 authorization (Key Developments).
• Board approves a 2% increase in the quarterly cash dividend to $0.2310 per share, raising the indicated annual dividend to $0.9240 per share, payable January 2, 2026 (Key Developments).
• Launch of New Mix, Mexico's top ready to drink tequila cocktail, into key U.S. markets, expanding Brown Forman's presence in the fast growing RTD category (Key Developments).
• Brown Forman Class A shares added to the FTSE All World Index, potentially broadening the investor base through greater index inclusion (Key Developments).

Valuation Changes

• The fair value estimate has fallen modestly from $39.27 to $37.43 per share, reflecting a slightly more conservative intrinsic value outlook.
• The discount rate has risen slightly from 6.78% to 6.96%, implying a marginally higher required return and risk assessment.
• Revenue growth has increased from roughly 2.5% to 3.1% annually, indicating somewhat stronger expectations for top line expansion.
• The net profit margin has edged higher from about 21.3% to 21.9%, pointing to a modest improvement in anticipated profitability.
• The future P/E multiple has decreased from approximately 25.0x to 21.3x, suggesting a more restrained view on valuation despite improved growth and margin assumptions.