S&P/ASX 200 Index (ASX: XJO) share Treasury Wine Estates Ltd (ASX: TWE) was smashed again on Friday, with its share price dropping 8% to $5.08.
The decline caps off a brutal year. The ASX 200 share is now down 53% over the past 12 months. Last week's sell-off made the company one of the worst performers on the ASX 200.
It's a sharp reversal for a 68-year-old business behind global prestigious brands like Penfolds, 19 Crimes and Lindemans.
Naturally, investors are asking the big question. Has the market gone too far? Or is there more pain ahead for the ASX 200 share?
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Deep US problems
This isn't just market nerves. Treasury Wine is facing real structural issues. The biggest concern is the US. It's one of the company's most important profit engines. And right now, it's misfiring.
Distribution problems continue to bite. That's especially worrying given how much capital has been poured into the region.
For his part, the relatively new Sam Fischer has not wasted any time in letting the market know that he's there to make changes. Mid-December he announced that the company would look to strip $100 million per annum in costs out of the business.
The $4 billion ASX 200 share also cancelled its $200 million buyback at the time, in a bid to increase flexibility and lower debt levels.
French major shareholder
The company attracted some positive attention in December when French billionaire Olivier Goudet emerged as a significant shareholder, sparking speculation about a potential takeover bid.
Goudet is well known in European business circles as the former head of JAB Holding, where he oversaw the Reimann family's wealth. He also led high-profile acquisitions including Krispy Kreme and Pret A Manger.
China hasn't saved the day
The ASX 200 share also had high hopes for China when trade restrictions eased in 2024. But the rebound hasn't delivered. Sales momentum remains sluggish. As a result, the recovery has been slower and weaker than expected.
Add in global trade tensions and political uncertainty, particularly in the US, and the outlook gets even murkier. These pressures have forced Treasury Wine into defence mode.
Treasury Wine management downgraded earnings, pulled guidance and shelved the planned buyback. Each move has chipped away at confidence. Together, they've accelerated the sell-off.
What now for the shares?
Broker sentiment is turning colder. UBS weighed in on Friday. It downgraded the stock to a sell from neutral. The broker slapped a $4.75 price target on the ASX 200 share, down from $5.25 on the shares. That implies downside risk compared with the current share price.
The broker points to shifting consumer behaviour, with younger drinkers consuming less alcohol than older generations. That's a trend hitting the key US and China markets hardest.
Within alcohol, wine continues to lag spirits and ready-to-drink categories. UBS also warned that the once-lucrative China market may now be oversupplied with Penfolds.
