Treasury Wine Estates (TWE) shares eased to A$5.92 on Tuesday after the Penfolds owner withdrew group and key segment earnings guidance on Monday, citing uncertainty in China and the United States ahead of its annual meeting on Thursday and the arrival of new chief executive Sam Fischer on October 27.
The stock fell more than 14% on Monday to A$5.97, a 10-year low.
Morgan Stanley, led by Melinda K Baxter, cut its price target by 21% to A$6.90 from A$8.70, saying the removal of management guidance on Penfolds, Treasury Americas and group earnings “creates further uncertainty around FY26/27 earnings profile”. “TWE lacks visible catalysts for a near-term re-rating and risks remain of further downgrades, with valuation keeping us equal-weight”, Morgan Stanley’s note to clients states.
UBS downgraded the stock to neutral and reduced its target by 35% to A$6.50 due to “increased earnings certainty”.
Macquarie said “Penfolds outlook is increasingly unclear” and it was “challenging to become more positive in absence of a strategy update”, trimming its target by 20% to A$6.40 while retaining a neutral rating. Its note added: “Fewer people are dining out in China, and the government’s alcohol ban has reduced business entertainment,” and, “Penfolds is essentially an “Asian” brand, with the region accounting for two-thirds of revenue and within the region, China two-thirds,” they said. “Clearly planning in this environment is difficult and so is forecasting. We have modelled a ~12-month adverse impact on China volumes.”
Citi analyst Sam Teeger kept a sell rating, cutting the target 21% to A$5.50. “The decision to pause the $200m buyback, which was only announced at the result in August (15 per cent completed), also suggests an elevated degree of uncertainty by the company and volatility in operational performance,” Citi’s note states.