The Treasury Wine Estates Ltd (ASX: TWE) share price has failed to follow the market higher today and is trading lower in afternoon trade.
At the time of writing the global wine company's shares are down 0.5% to $15.36.
Why has the Treasury Wine share price dropped lower?
Today's decline could be attributable to a broker note out of Goldman Sachs this morning.
According to the note, the broker has retained its sell rating and $13.70 price target on Treasury Wine Estates' shares.
This price target implies potential downside of approximately 11% over the next 12 months.
Why is Goldman bearish?
Goldman Sachs has been looking through industry data to gain an insight into how the company is trading.
It notes that trends deteriorated over the March/April period, before improving a touch in May and June. Particularly with Chinese import and Australian exports data.
Its analysts said: "Both these series have recovered into positive territory but the two year stack is flat for China imports and +14.3% for Australian exports, which adjust for the impact of TWE's warehouse fill in the prior year. While these improvements are positive, ongoing recovery in the export/import data will be important to support our forecast for Asian volume growth of 19% in 2H19 and 12% in 1H20."
Unfortunately, offsetting this improvement has been a potential loss of market share in the United States.
Goldman explained: "In contrast, Nielsen scan data in the US continues to show modest market share declines for TWE in June. This is disappointing compared to our expectations and suggests there may be risk to our North American volume growth expectations in 2H19 (+6.6%), although from an earnings perspective the weaker AUD/USD compared to last year should help support our margin forecasts."
In light of this, the broker believes that Treasury Wine Estates will deliver EBITS growth of 22.6% in FY 2019, which falls short of its guidance of "approximately 25% EBITS growth".
One China-focused company that it is bullish on is A2 Milk Company Ltd (ASX: A2M). As I mentioned here yesterday, Goldman has a buy rating and $15.70 price target on the infant formula and fresh milk company's shares.
