10:58 AM EDT, 08/26/2025 (MT Newswires) -- Constellation Brands' ( STZ ) beer gross margin profile being dependent on operating leverage signals risk, BofA said in a Tuesday research note.

Constellation Brands ( STZ ) might be able to salvage its margin targets with more cost savings, marketing spend, BofA said, adding that if gross margin further erodes on lower sales, it saw a "tough case for a higher multiple".

The analysts saw greater downside potential for Constellation as the sales in the beer industry remains pressured. Soft demand from core Hispanic group and long-term alcohol consumption trends further added to the risk profile.

BofA lowered its fiscal 2026 earnings per share estimate to $12.6 from $12.75, positioning it towards the lower end of Constellation Brands' ( STZ ) 2026 EPS outlook range of $12.6 to $12.9.

The firm downgraded Constellation Brands ( STZ ) to underperform from neutral and lowered its price target to $150 from $182.

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