Wine And Spirits Restructuring And Veracruz Brewery Expansion Will Succeed

Constellation Brands’ price target remains unchanged at $187.52 as sharply reduced FY26 guidance, ongoing demand headwinds, and margin concerns drive analyst caution despite a discounted valuation and stable long-term outlook.

Analyst Commentary

• Constellation Brands' sharply reduced FY26 guidance, including significant downward revisions to beer volumes and EBIT, has raised concerns about demand visibility, inventory destocking, and management's credibility in communication and planning.
• Ongoing secular pressures in the U.S. beer and alcoholic beverage market, including softening demand among core Hispanic consumers and weak scanner data, are driving increased caution from bearish analysts and creating headwinds for volume growth.
• Margin deterioration, exacerbated by greater-than-expected deleverage and elevated operating costs, has led to lower adjusted EPS estimates, with analysts highlighting persistent risk to profitability.
• Despite a challenging near-term setup and category weakness, bullish analysts note the company's solid balance sheet, discounted valuation, and the potential for low single-digit top line and mid single-digit bottom line growth over the long term.
• Share price reactions have been influenced by guidance reiterations and Q1 outperformance relative to low expectations, but skepticism remains regarding the achievability of management’s targets and the timing of a return to sustainable growth.

What's in the News

• U.S. exports of distilled spirits to Canada fell 62% and wine exports dropped 67% in the first half of 2025 due to a Canadian boycott following U.S.-Canada trade tensions, impacting Constellation Brands and other alcoholic beverage companies (WSJ).
• Alcohol consumption among U.S. adults has reached a record low, with most Americans now viewing even moderate drinking as harmful, according to a Gallup survey (Reuters).
• Leading alcohol producers, including Constellation Brands, are preparing to enter the cannabis beverage market, especially via hemp-derived THC products, as regulatory opportunities emerge (Reuters).
• Drinks containing THC are only legal in licensed dispensaries across 24 U.S. states, but hemp-derived products may allow broader industry entry, presenting new growth avenues for Constellation Brands (Reuters).
• Upcoming U.S. Dietary Guidelines are expected to drop specific daily alcohol limits, instead encouraging moderation or reduced intake, potentially discouraging consumption further and affecting industry sales (Reuters).

Valuation Changes

Summary of Valuation Changes for Constellation Brands

• The Consensus Analyst Price Target remained effectively unchanged, at $187.52.
• The Consensus Revenue Growth forecasts for Constellation Brands remained effectively unchanged, at -0.6% per annum.
• The Future P/E for Constellation Brands remained effectively unchanged, at 16.12x.