What Happened?
Shares of alcohol company Brown-Forman (NYSE: BF.B) fell 2.4% in the afternoon session after competitor Constellation Brands warned of macroeconomic headwinds affecting consumer demand.
The negative outlook from Constellation, parent of Corona beer, caused an immediate drop across the alcohol sector, pulling Brown-Forman shares down. Adding to the pressure, JPMorgan lowered its price target on Brown-Forman to $29 from $30, while maintaining its "Underweight" rating on the stock. This comes as Brown-Forman is navigating its own challenges, having recently reported first-quarter results that showed a decline in both net sales and earnings per share compared to the previous year, contributing to what has been a tough run for the stock.
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What Is The Market Telling Us
Brown-Forman’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 4% on the news that RBC Capital expressed caution about the company's near-term outlook, citing pressure in the U.S. market and challenges with its distribution network.
The investment firm maintained its "Sector Perform" rating but highlighted that pressure in the U.S. is expected to be "exacerbated by execution challenges" as the company undergoes changes in its distribution system. RBC noted this transition poses the "biggest risk to numbers," especially since Brown-Forman's guidance anticipates improving trends. This investor caution comes just before the company is slated to release its first-quarter results on August 28, with analysts already forecasting a year-over-year decline in earnings per share. Adding to the uncertainty, the company recently announced that its CFO, Leanne Cunningham, plans to retire in May 2026.
Brown-Forman is down 21.5% since the beginning of the year, and at $29.18 per share, it is trading 41.1% below its 52-week high of $49.54 from October 2024. Investors who bought $1,000 worth of Brown-Forman’s shares 5 years ago would now be looking at an investment worth $365.27.
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