Analyst Dara Mohsenian from Morgan Stanley maintained a Hold rating on Constellation Brands (STZ – Research Report) and keeping the price target at $202.00.
Dara Mohsenian has given his Hold rating due to a combination of factors impacting Constellation Brands’ future growth prospects. The company has revised its long-term revenue growth guidance downward, particularly in its beer segment, which is now expected to grow at a slower pace than previously anticipated. This adjustment reflects broader industry challenges, such as changing consumer preferences towards health and wellness, lower alcohol consumption among younger generations, and increased competition in the high-end market segment.
Additionally, Constellation Brands is undertaking significant cost-cutting measures, including a $200 million reduction in corporate expenses by FY28, which could mitigate some financial pressures. However, the sale of its low/mid-end wine business, while strategic, is expected to dilute earnings in the short term. Despite these challenges, the company’s beer margin assumptions and distribution growth forecasts appear reasonable, but the potential for reduced shelf space due to slower volume growth remains a concern. Overall, these mixed factors contribute to the Hold rating, suggesting a balanced outlook with limited upside potential in the near term.
In another report released on April 7, Jefferies also maintained a Hold rating on the stock with a $201.00 price target.
Based on the recent corporate insider activity of 45 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of STZ in relation to earlier this year.