Shares in brewing group Constellation Brands (STZ) staggered 1% lower today despite one analyst welcoming summer and the “time to start drinking beer.”
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Show Me Story
Gerald Pascarelli, analyst at Needham upped his price target on the group, whose brands include Corona and Modelo, from $195 to $200. He has a Buy rating on the stock.
Pascarelli said STZ still remains a “show me” story with valuation well off historic averages. “We like the risk/reward set up from here as comparisons ease, and the weather should seemingly improve relative to May and June,” he said.
Pascarelli added that STZ was a name which many investors want to “get more constructive on.”
He said that STZ is historically one of the best companies he looks at from a fundamental perspective, though given continued macro pressure and challenges with the Hispanic consumer, it is in the midst of contending with many headwinds that fall outside their control.
Long Term Growth
Despite these headwinds, Pascarelli said STZ has remained a relative market share gainer amid a weak category backdrop and brand health metrics remain best in class.
“Based on such a discounted valuation, we believe much of this “moment in time” bad news is already embedded in the shares, and expect the multiple to expand on any signs of sequential strength, which may come as soon as July/August,” he said.
UBS also raised its price target on Constellation Brands to $205 from $195 and kept a Buy rating on the shares. It said that despite a “choppy near-term set-up,” UBS still sees a path to low single digit top-line and mid single digit bottom-line growth over the long-term.
Is STZ a Good Stock to Buy Now?
On TipRanks, STZ has a Moderate Buy consensus based on 11 Buy and 7 Hold ratings. Its highest price target is $239. STZ stock’s consensus price target is $198.18 implying a 13.98% upside.
