What Happened?
Shares of alcohol company Brown-Forman (NYSE: BF.B) fell 4.7% in the afternoon session after the stock continued to decline as the company reported a 3% sales drop for the first quarter of fiscal year 2026, citing significant headwinds from an ongoing trade dispute with Canada.
This follows a 7% sales decline in the previous quarter and a 5% drop for the full prior year. A key factor in the latest quarter's performance was a nearly 60% plunge in Canadian sales, attributed to a countrywide boycott in response to U.S. tariffs. CEO Lawson Whiting stated the dispute "created significant headwinds to our first quarter organic net sales results." Broader industry challenges are also at play, including general economic weakness, overproduction by distillers, and what Whiting described as a "flat" market for American whiskey, raising concerns about potential price drops due to excess supply.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Brown-Forman? Access our full analysis report here, it’s free.
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 6 days ago when the stock dropped 2.4% on the news that 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.
Brown-Forman is down 26.2% since the beginning of the year, and at $27.45 per share, it is trading 44.6% 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 $347.77.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
