The Treasury Wine Estates Ltd (ASX: TWE) share price is on course to end the week with a decline.
In afternoon trade the wine company's shares are down 0.5% to $18.90.
Why is the Treasury Wine share price dropping lower?
Investors may have been selling the company's shares today after the release of a reasonably bearish note out of Goldman Sachs.
According to the note, the broker has retained its sell rating but lifted its price target on Treasury Wine's shares to $15.30.
This price target implies potential downside of around 19% for its shares over the next 12 months.
Why is Goldman Sachs bearish on Treasury Wine?
Goldman Sachs notes that softening data trends over the past couple of months have continued in a number of areas.
The note explains that Nielsen data demonstrates that its sales in the US wine market are softening. The data shows that Treasury Wine's brands are exhibiting below market sales growth. This includes weakness in both volume and value terms on a year on year basis.
Goldman also notes that pricing in China and Australia was mixed across their respective e-commerce websites. The broker saw little movement beyond the already low relative pricing seen from recent months.
Another piece of data which it finds concerning is export data. Both Australian alcohol exports and Chinese wine import data continue to deteriorate. So much so, they are turning negative on a two-year CAGR basis.
Goldman concluded: "Overall, while the ecommerce pricing and sales indicators remain relatively positive or stable, the negative trend within the Nielsen US retail scan data and the broader macro data into China (Australian alcohol export and Chinese wine import) remain a concern, although the relatively stronger performance of premium wine sales suggests TWE's portfolio should be outperforming in a declining market."
Instead of Treasury Wine, the broker appears to believe investors should be buying Afterpay Touch Group Ltd (ASX: APT) and Telstra Corporation Ltd (ASX: TLS) shares.
This week Goldman Sachs reiterated its conviction buy ratings on both companies' shares.
