DOWNGRADE

The stock price of TWEis not dropping because of staffing issues but because of a downgrade by GoldmanSachs which issued a sell rating with a target price of $15.30 over the next 12months.

Why is Goldman Sachs bearish on Treasury Wine?

Goldman Sachs notesthat softening data trends over the past couple of months have continued in anumber of areas.

The note explains thatNielsen data demonstrates that its sales in the US wine market are softening.The data shows that Treasury Wine’s brands are exhibiting below market salesgrowth. This includes weakness in both volume and value terms on a year on yearbasis.

Goldman also notesthat pricing in China and Australia was mixed across their respectivee-commerce websites. The broker saw little movement beyond the already lowrelative pricing seen from recent months.

Another piece of datawhich it finds concerning is export data. Both Australian alcohol exports andChinese wine import data continue to deteriorate. So much so, they are turningnegative on a two-year CAGR basis.

Goldman concluded:“Overall, while the ecommerce pricing and sales indicators remain relativelypositive or stable, the negative trend within the Nielsen US retail scan dataand the broader macro data into China (Australian alcohol export and Chinesewine import) remain a concern, although the relatively stronger performance ofpremium wine sales suggests TWE’s portfolio should be outperforming in adeclining market.”