Constellation Brands and Anheuser Busch Inbev Ratings Downgraded

Analysts at TD Cowen have downgraded their ratings of Constellation Brands (NYSE:STZ) and Anheuser Busch Inbev (EBR:ABI) from "Buy" to "Hold."

The analysts noted that Constellation is experiencing "broader pressures" within its beer business, while AB InBev is facing ongoing demand challenges in the US and China.

Constellation Brands

Constellation, known for its Corona beer, has reduced its annual net sales growth outlook to 4%-6%, down from 6%-7%. This adjustment raises concerns about the firm's fiscal year 2026 results potentially being at "risk."

While Constellation's beer sales have helped counterbalance declines in its wine and spirits division, the analysts pointed out that the company is "not immune" to downturns in this category.

Management attributes recent slowdowns to rising unemployment among Hispanic consumers, suggesting a rebound next year; however, analysts adopt a more cautious perspective, noting that unemployment rates remain low by historical standards.

Anheuser Busch Inbev

AB InBev recently reported volumes and revenues that fell short of estimates for its second quarter. Despite reaffirming its annual growth forecast of 4%-8% for core profits, the company highlighted challenges posed by adverse weather and economic conditions in various markets.

The US volumes have reportedly declined by 2.5% year-on-year over the past twelve weeks, partially attributed to a boycott against Bud Light in 2023.

Additionally, the analysts mentioned that China's performance has been negative throughout the year due to macroeconomic pressures, despite its exposure to the more resilient super-premium segment.

Sales in Mexico have also taken a hit due to reductions in government subsidies and unfavorable weather conditions during July and August.

(Reuters contributed reporting.)