Morgan Stanley noted that second-quarter results were ahead of lowered expectations as Constellation attributed topline weakness to the challenging macro environment, particularly for its core Hispanic consumer.
“Our loyalty is up with Corona in the general market. Our loyalty is up with Hispanic consumers for Modelo,” Newlands said during a post-earnings call.
Constellation Brands’ sales and profit came in above Wall Street expectations, mainly driven by the company’s beer segment, which has been doing well compared to its wine and spirits business.
Retail sentiment on Constellation Brands improved to ‘extremely bullish’ territory from ‘bullish’ territory a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits. The stock witnessed an 891% increase in retail user message count on Stocktwits over the past 24 hours, as of Tuesday morning.
Morgan Stanley lowered its price target on Constellation Brands to $160 from $176 and maintained an ‘Equal Weight’ rating, according to TheFly. Morgan Stanley noted that second-quarter results were ahead of lowered expectations as Constellation attributed topline weakness to the challenging macro environment, particularly for its core Hispanic consumer.
Morgan Stanley said it sees structural longer-term headwinds, including health and wellness trends, demographic pressures, cannabis substitution effects, and sustained higher-end beer competition.
Newlands stated that, based on a monthly study conducted by the company, it has been observed that 80% of surveyed Hispanic and non-Hispanic consumers continue to express concerns about the socioeconomic environment.
Shares of Constellation Brands have declined over 35% this year and have fallen 41% in the last 12 months.
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