Buffett's $2B+ Bet With Big Long-Term Potential Just Got Upgraded

Key Points

• As of March 31, Berkshire Hathaway's stake in Constellation Brands came in at $2.2 billion.
• Several analysts increased their price targets on the stock after its latest earnings.
• With Hispanic consumers being key to the firm's success, expected shifts in U.S. demographics can be a huge long-term tailwind for the stock.

Wall Street analysts recently boosted their price targets on one of Warren Buffett’s multi-billion-dollar stock picks, Constellation Brands NYSE: STZ. According to Berkshire Hathaway’s NYSE: BRK.B latest 13F filing, it owned just over 12 million shares of Constellation as of March 31. At that time, the investment was worth approximately $2.2 billion. That put Constellation in the top 20 largest public stock holdings for the vaunted “Oracle of Omaha."

The $30 billion consumer staples stock reported its latest financial results on July 1. Since then, MarketBeat has tracked six Wall Street analysts who boosted their price target on the stock. So, how optimistic are analysts on Constellation? What do Buffett’s buying patterns say about its potential? Ultimately, is there reason to believe Constellation shares can achieve significant gains going forward?

STZ Earnings: Industry and Hispanic-Consumer Weakness Weigh On Sales

Constellation's business is almost all about beer; it accounted for 89% of total revenue last quarter. Constellation owns the top imported Mexican beer brands in the United States, including Corona, Modelo, and Pacifico. Approximately half of the company’s sales come from Hispanic consumers in the United States. Thus, paying close attention to this demographic is essential to understanding Constellation's long-term potential. However, the company’s business is currently under pressure on multiple fronts.

The beer industry is in a period of softness. Based on Constellation’s statements, industry-wide beer sales fell 4.7% last quarter. However, Constellation still showed strength, picking up market share as its beer sales only declined by 2%. Management and analysts also alluded to the idea that immigration enforcement is hitting its Hispanic customer base particularly hard. It is leading to fewer gatherings where these customers consume its flagship brands. These factors influenced the 5.5% drop in total revenue seen last quarter and have played a significant role in the stock’s 2025 decline.

Constellation missed expectations on both sales and adjusted earnings per share (EPS). Still, the report's saving grace was that Constellation maintained its full-year adjusted EPS guidance for fiscal 2026. This played a significant role in many analysts boosting their price targets.

Squaring Buffett’s Bullishness With Analyst Expectations

Based on changes to Berkshire’s 13F filings, Buffett clearly became much more bullish on the upside potential of Constellation in Q1. Berkshire owned around 5.6 million shares of Constellation at the end of 2024. At that time, shares of Constellation traded at approximately $219. Berkshire's big position in the name at that time suggested it saw value in shares even at those levels. However, by March 31, shares had fallen by over 16% to around $182. The stock’s large drop was almost certainly a reason Buffett more than doubled the shares he held in Constellation by the end of Q1. Luckily, whatever upside the legendary investor saw is still more than in play. As of the July 8 close, Constellation shares are down nearly 7% since March 31 and down 23% since the end of 2024.

The MarketBeat consensus price target on Constellation is nearly $215, signaling that shares could rise over 25%. Although several analysts recently increased their price target on the stock, they imply substantially less upside. The average of these targets, updated after Constellation’s latest earnings, comes in at $191, signaling only around 12% upside.

However, it is very important to understand that Wall Street price targets only estimate where a stock might go over the next 12 months. That differs from Buffett’s long-term investment approach. Therefore, the limited upside these price targets suggest should not discourage those aiming to follow Buffett’s strategy. The upside he envisions over a long period is probably much greater than what the stock might achieve in a year.

Demographic Shifts Are Paramount to Constellation’s Long-Term Potential

Thinking long-term when it comes to Constellation stock is wise. This is because expected demographic shifts, which could unfold over the coming decades, are a key reason for being bullish in the long term. Experts predict that from 2030 to 2060, the share of Latinos and Hispanics within the overall U.S. population will increase by more than any other racial group. 

This forecast holds across high immigration to zero immigration scenarios (see Figure 8). Assuming this plays out, it creates a very strong structural tailwind for Constellation to grow its business. Overall, this data and Buffett’s investment suggest that big-time upside can be had in shares of Constellation Brands. However, having a long-term investment horizon is key to reaping the benefits.