Morningstar sees near-term snags in California market for Australia's Treasury Wine

Treasury Wine Estates

03/06/2025 19:44

** Analysts at Morningstar expect near-term disruptions on new routes to the market of California for Australia's Treasury Wine Estates TWE.AX

** TWE's major distributor in the U.S. will cease operations in California starting September

** Investment research firm sees short-term decline in group volumes and cost hit in the U.S. following exit of the distributor

** Lowers FY25 EBIT estimate by 1% to A$771 mln ($498.14 mln) and cuts FY26 estimate by 7% to A$836 mln

** Demand weakness appears set to persist into next year, particularly at lower price points, as consumers increasingly snub cheaper wines — Morningstar

** Flags fierce competition for below-luxury wines, adding that the market remains in oversupply

** Morningstar maintains fair value estimate of A$12 on TWE stock, says shares "screen" undervalued

** Stock down 28.2% YTD

($1 = 1.5477 Australian dollars)

(Reporting by Rishav Chatterjee in Bengaluru)

((Rishav.Chatterjee@thomsonreuters.com))