Constellation Brands downgraded to Neutral from Overweight at JPMorgan

JPMorgan downgraded Constellation Brands (STZ) to Neutral from Overweight with a price target of $203, down from $262, following the fiscal Q3 miss. While secular trends including premiumization and faster growth in legal-drinking age Hispanic consumers benefits the company’s portfolio, this is balanced by near-term prolonged pressure on lower-income and Hispanic consumers and overhangs from lower consumption of alcohol by younger consumers, potential impacts from weight loss drugs, and tariff risk, the analyst tells investors in a research note. The firm says Constellation’s wine and spirits organic growth and margin trajectory should improve over time as it further “premiumizes” the portfolio and optimizes its cost structure, but the outlook remains challenging overall given subdued category trends.