Analysts: Brown-Forman Facing Foreign Exchange Headwind

Brown-Forman Corporation's (NYSE: BF-B) brisk sales growth is likely to continue, but a strong dollar will hurt bottom line results, an analyst said Thursday.

Morgan Stanley's Dara Mohsenian cut his fiscal 2015 earnings forecast for the alcoholic beverage maker to $3.26 a share, from $3.36, citing foreign exchange pressures. Analysts on average expect 2015 earnings of $3.36 a share.

"The valuation isn't compelling," Mohsenian said of the company's stock price, maintaining an an Equal-Weight rating on Brown-Foreman and a $92 target.

But the company's sales growth rate of 7 percent in the recent second quarter, vs. 3 percent in its first quarter, leaves Stifel's Mark Schwartzberg maintaining Buy rating on the company.

The recent revenue acceleration is evidence that underlying growth is "likely to sustain at or slightly above 7 percent" through at least the start of fiscal 2016, Schwartzberg said.

Analysts on average expect fiscal 2015 earnings growth of 6.3 percent.

Schwartzberg cited recent market research data suggesting the company's sales grew 9 percent in November.

The company, whose brands include Jack Daniels, Southern Comfort and Finlandia Vodkas, recently posted second-quarter earnings of $0.97 a share, vs. Wall Street's expectation of $1.04.

Sales growth of 7 percent was slightly below expectations because of foreign exchange effects.

Schwartzberg trimmed his fiscal 2015 earnings estimate to $3.26 a share, from $3.33 a share, and shaved a dollar off his price target to $104.

Mohsenian said the company's plans for a national roll-out of Jack Daniels Tennessee Fire beverage in the fourth quarter will help drive sales growth.

But the launch has been "widely expected" and won't help the stock price, Mohsenian said.