Constellation Brands (STZ) is facing an abundance of headwinds which will likely translate into a lackluster February quarter, RBC Capital Markets said in a note to clients Friday.
The investment firm said that it expects near-term softness, and for the quarter, it is forecasting beer depletions of minus 2%, which is below sell-side consensus estimates of plus 2%, but above buy-side expectations of minus 3%.
Constellation shares have "materially underperformed" the Consumer Staples Select Sector SPDR Fund mainly due to "weaker tracked channel trends, moderating market share gains, regulatory impacts from tariffs and stricter immigration controls weighing on Hispanic consumers," RBC said.
However, even amid all the headwinds, Constellation shares are likely "already pricing in a lot of bad news," RBC said.
The investment firm reduced Constellation's price target to $289 from $293, while keeping the company's outperform rating.
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