TD Cowen Maintains Hold Rating on Constellation Brands (STZ) Stock

Core Viewpoint - Constellation Brands, Inc. is currently viewed as a poor investment option due to declining retail sales and reduced beer volume growth estimates for FY 2026, leading to a lowered price target by analysts [1][2]. Financial Performance - In Q2 2026, Constellation Brands' Beer Business experienced a net sales decline of 7% to $2.34 billion, attributed to an 8.7% decrease in shipment volumes, reflecting socio-economic challenges affecting consumer demand and distributor inventory adjustments [2]. - The operating margin for the Beer Business fell by 200 basis points to 40.6%, primarily due to increased cost of goods sold (COGS) and higher marketing expenses as a percentage of net sales, although this was somewhat offset by favorable pricing [2]. Management Insights - Management believes that the current socio-economic challenges, particularly within the Hispanic community, are temporary; however, the commitment to expansion during a period of declining sales raises concerns about operating margins and overall profitability [3].