It was bad news today for beverage stock Constellation Brands (STZ) as it faced mounting concerns over product sales in a changing market. Constellation announced cuts to its demand forecast and earnings with them, and investors revolted. Constellation shares were down over 7% in Tuesday morning’s trading.
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For a while, things were looking great for Constellation, especially after the Dylan Mulvaney debacle hit Anheuser-Busch (BUD) shares like a beer truck on icy roads hits a mailbox. Modelo and Corona sales were doing dandy, and shares gained accordingly. But now, Constellation is paring back earnings outlooks, and that is hitting Constellation every bit as hard.
Constellation cut its fiscal 2026 earnings per share outlook from a range of $12.60 to $12.90 per share down to a range of $11.30 to $11.60 per share. Organic net sales are set to fall between 4% and 6%, which is a nightmare compared to previous projections of a potential gain of 1%. In fact, the news was sufficiently bad for Constellation to hit a 52-week low during Tuesday’s trading, reports noted.
What Part of the Market Puked in the Bed?
Constellation CEO Bill Newlands noted, “We continue to navigate a challenging macroeconomic environment that has dampened consumer demand and led to more volatile consumer purchasing behavior since our first quarter of fiscal 2026. Over the last several months, high-end beer buy rates decelerated sequentially, as both trip frequency and spend per trip declined.”
Thus, we are left with two potential narratives here, and both may be accurate. There are clearly concerns about the Hispanic market, which has been in decline for some time, possibly due to the current political climate. But there has also been growing concern about alcohol sales in general, as consumers cut back and seek cheaper alternatives, a trend we have seen across several industries of late.
Is Constellation Brands Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on STZ stock based on 12 Buys, six Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 34.38% loss in its share price over the past year, the average STZ price target of $198.72 per share implies 31.78% upside potential.
