Constellation Brands Downgraded Amid Subdued Beer Volume Growth Projections

Last week, Constellation Brands Inc. STZ reported second-quarter adjusted earnings per share of $4.32, beating the analyst consensus of $4.08. Quarterly revenues of $2.92 billion beat the street view of $2.90 billion.

The company reported a loss per share of $6.59, including a $2.25 billion non-cash goodwill impairment loss for the Wine and Spirits business.

BofA Securities downgraded Constellation Brands, reflecting lowered calendar year 2025 estimates amid slower beer volume growth.

The analyst writes, “We pause to consider that slower growth reflects more than just the macroeconomic environment.”

The analyst downgraded Constellation Brands to Neutral from Buy and lowered the price target to $255 from $300.

The lowered Neutral rating reflects that volumes are expected to remain subdued for the rest of the year. Much of this outlook is already factored into the price, and aside from opportunistic trades driven by weekly data, the analyst expects the stock to stay within a limited range for some time.

BofA Securities highlights its proprietary beer depletion analysis, accurately reflecting challenging year-ago comparisons and a softer consumer environment.

The BofA analyst has kept the fiscal year 2025 EPS estimate unchanged at $13.77. However, the sales growth forecasts for fiscal years 2026 and 2027 have been adjusted from 8% to 7%, reflecting the lower end of Constellation Brands’ beer growth expectations.

This revision stems from the lack of clear catalysts or data suggesting a potential acceleration in beer sales toward the mid or high-end of their growth model. As a result, the analyst slightly lowered the EPS projections for fiscal 2026 to $15.19 and for fiscal 2027 to $16.83.

Price Action: STZ stock is down 1.9% at $242.00 at last check Monday.

Photo: T. Schneider via Shutterstock

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