STZ: Lowered Guidance And Q2 Update Will Pressure Near-Term Upside

Analysts have lowered their price target on Constellation Brands by $30, to $175 from $205, citing already-reduced guidance and near-term headwinds. They expect top line trends to improve on easier comparisons into 2026.

Analyst Commentary

Bearish analysts have highlighted that the recent $30 cut to the price target reflects growing skepticism around Constellation Brands' ability to deliver on its prior growth ambitions in the near term. While the rating remains constructive, the lower target signals a reassessment of the risk and reward profile ahead of upcoming earnings.

Bearish Takeaways

• Bearish analysts view the reduced price target as evidence that valuation must better reflect execution risk following management's earlier guidance cut.
• The upcoming Q2 earnings report is not expected to be a major catalyst. This reinforces concerns that sentiment may remain subdued until clearer signs of reaccelerating growth emerge.
• Near term headwinds, including softer demand trends and tougher comparisons, are seen as constraining revenue growth and margin expansion. This is weighing on the stock's upside potential.
• Even with downside risk partly priced in, some caution that any further missteps on guidance or growth delivery could prompt additional pressure on the stock's valuation multiples.

What's in the News

• Modelo launches Modelo Noche Especial, a limited-edition amber lager inspired by the Noche Buena holiday, targeting demand for culturally relevant seasonal beers within the growing U.S. Hispanic consumer base (Key Developments).
• Constellation Brands completes repurchase of 3,375,602 shares, representing 1.9% of shares outstanding, for a total of $604.02 million under the buyback program announced on April 9, 2025 (Key Developments).
• The Board amends and restates the company’s by-laws to align with updated Delaware corporate law, clarify meeting procedures, and reserve the white proxy card for exclusive Board use (Key Developments).
• Wells Fargo Securities, LLC is both removed and subsequently added as Co-Lead Underwriter for Constellation Brands’ $498.58 million fixed-income offering, indicating adjustments in the company’s capital markets syndicate (Key Developments).

Valuation Changes

• Fair Value: reduced from approximately $131.77 to $118.00, indicating a meaningful downward reassessment of intrinsic value.
• Discount Rate: increased slightly from about 6.78% to 6.96%, reflecting a modestly higher required return and risk premium.
• Revenue Growth: revised upward from roughly -4.82% to -3.38%, implying expectations for a smaller decline in top line performance.
• Net Profit Margin: lowered from around 24.07% to 22.40%, signaling a modest deterioration in expected profitability.
• Future P/E: decreased from about 12.37x to 11.73x, suggesting a slightly lower valuation multiple on forward earnings.