Cautious Hold Rating on Constellation Brands Amid Demographic Challenges and Revised Growth Expectations

TD Cowen analyst Robert Moskow has maintained their neutral stance on STZ stock, giving a Hold rating yesterday.

Robert Moskow’s rating is based on several factors influencing Constellation Brands’ current and future performance. The company reported a better-than-expected earnings per share for the fourth quarter, but it also acknowledged a slowdown in its key Hispanic demographic, which has been a significant driver of its beer business. The company’s revised growth expectations and reductions in capital expenditures and overhead are seen as appropriate for the current market conditions, suggesting that the market has already accounted for these changes.
Additionally, the company faces socioeconomic challenges affecting Hispanic consumers, with a notable decline in purchase rates. While management considers these issues non-structural, the duration and impact remain uncertain. Furthermore, the company expects to mitigate some cost pressures through overhead reductions and currency devaluation, but overall growth projections are modest. These factors contribute to the Hold rating, indicating a cautious outlook while acknowledging potential for adjustment if conditions improve.

In another report released yesterday, Morgan Stanley also maintained a Hold rating on the stock with a $202.00 price target.