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The Constellation Brands family includes Pacifico, a Mexican beer.
Getty Images/Justin Sullivan
Constellation Brands is a conglomerate that owns a number
On Wednesday, the company will release its fiscal first-quarter profits, and
Goldman Sachs is a financial services firm.
Investors may be pleasantly surprised by the spirit maker’s earnings, according to. Constellation Brands (ticker: STZ) received a Buy rating and a $275 price target from Bonnie Herzog on Monday; the stock is also on the firm’s Conviction Buy List, which it has been since February.
Positive comments from Constellation’s chief financial officer, as well as good feedback from her survey of beer distributors, have given Herzog reason to be optimistic about the approaching quarter. “We think the set-up looks favorable ahead of the print,” she said, “especially given the market’s decreased expectations on the topline due to out-of-stock/supply issues.” While Constellation—and the alcohol sector as a whole—isn’t alone in dealing with item availability, Herzog believes it won’t be as much of a concern this quarter. She cited management’ upbeat comments as well as her own data, which shows that “demand for Constellation product (particularly Corona Extra and Modelo Especial) continues to outrun supply—a wonderful problem to have.” While the quarter may not be perfect, Herzog expects strong top- and bottom-line performance, particularly as Constellation’s higher-end brands gain market share. According to Herzog, the positive report should be a catalyst for the stock, which is one of the “best growth stories across the United States Staples market and favorably levered to the most attractive potential in alcoholic beverages.” Constellation’s most recent earnings, released in April, were better than expected, but that didn’t help the stock rise much. In early trade, the stock was up 0.2 percent to $229.02. The stock is risen 31.3 percent in the last 12 months and has gained 4.4 percent this year. Teresa Rivas may be reached at teresa.rivas@barrons.com.
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