On Tuesday, JPMorgan (NYSE:JPM) issued a downgrade for Brown Forman (NYSE:BFb) (NYSE:BF-B), shifting the stock's rating from Neutral to Underweight. The firm also adjusted the price target for the company's shares to $43.00, a decrease from the previous target of $45.00. This decision was influenced by persistent challenges in the U.S. and Developed International markets.
The downgrade follows an earnings release on December 5, which indicated some sequential improvement in Brown Forman's performance. Despite the positive aspects, including a recovery from the stock's low point facilitated by a low expectation bar and crowded short positioning, the analyst expressed concerns about the company's prospects.
The report emphasized the potential for increased tariff uncertainty, specifically the possibility of the European Union reinstating retaliatory tariffs at a rate of 50% as of March 31, 2025. Additionally, the consumption trends in the U.S. and Developed International markets are still not showing robust growth, lingering far behind the historical growth rates of 4-5%.
JPMorgan's analysis suggests that while there has been a slight improvement, Brown Forman is not yet in the clear. The firm remains cautious due to the looming tariff issues and the ongoing softness in consumer trends within the company's key markets.
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