Treasury Wine Estates Ltd (ASX: TWE) shares have been having a rough time in 2025.
Since the start of the year, the wine giant's shares have lost 33% of their value.
As a comparison, the ASX 200 index is up almost 8% over the same period.
Does this make its shares a buy, hold, or sell now? Let's see what Macquarie Group Ltd (ASX: MQG) is saying about this blue chip.
What is the broker saying?
Macquarie notes that a number of factors have been weighing on the liquor industry in recent times.
This includes weak secular growth and concerns over Gen Z drinking trends. It said:
A combination of weak secular growth, premium brand price exhaustion and concerns about Gen Z drinking trends have manifested as concerns about the long-term viability of the liquor industry. Is the alcohol industry facing structural adjustment or a reset after a massive spike during Covid? Depressed stock prices and low growth expectations reflect concerns.
Given the importance of the luxury wine category for Treasury Wine, Macquarie notes that recent price weakness in the industry is a concern. It adds:
Penfolds remains very reliant on annual vintage release price growth and Luxury portfolio mix to achieve growth. The premium pricing of En Primeur (EP) Bordeaux wines is a benchmark for the fine wine market and pricing trends across the industry. The 2024 EP campaign was described as dysfunctional with a 30% price reduction on V23. Distress at the top end of the fine wine market is worrisome because Penfolds has aggressively priced up its Bin and Icon portfolio over the last 10 years.
Nevertheless, the broker remains cautiously optimistic on the category, saying:
Despite the "booze is dead" narrative it remains one of the most durable consumer categories with consumption occasions linked to social settings. Compared to the traditional CPG category, the alcohol category has strong branding, high margins and constant innovation.
Are Treasury Wine shares a buy, hold, or sell?
Given the uncertainty, Macquarie is sitting on the fence with this one and considers it a hold.
According to the note, the broker has a neutral rating and $8.00 price target on its shares. This implies modest potential upside of 5.5% from current levels.
Commenting on its neutral recommendation, the broker said:
In time, there may be an opportunity in TWE with initial evidence pointing toward alcohol headwinds abating at some point alongside a depressed valuation. However, with downside risk to consensus earnings (particularly for Penfolds) and a lack of clarity on strategy, we retain Neutral.
