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Will Constellation Brands’ Stock Rebound with Its Q3 Results?

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Do analysts expect upside?

Stocks of Constellation Brands (STZ) and other major alcoholic beverage players were in the red in 2018. Constellation Brands’ stock declined 29.6% in 2018 while Anheuser-Busch InBev (BUD), Molson Coors Brewing (TAP), and Brown-Forman (BF.B) fell 41.0%, 31.6%, and 11.8%, respectively.

On December 6, Wells Fargo lowered its price target for Constellation Brands stock to $260 from $275. On December 11, Barclays lowered its price target to $240 from $257. On December 16, J.P. Morgan lowered its price target to $220 from $255. On December 20, Morgan Stanley cut its price target to $246 from $259. On December 13, UBS initiated coverage of Constellation Brands stock with a “neutral” rating and a $209 price target.

Currently, the average price target for Constellation Brands indicates a significant upside potential in 2019. As of January 3, the 12-month average price target for Constellation Brands stock was $235.74, which implies an upside of about 46%.

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Analysts’ recommendations

As of January 3, Constellation Brands stock was rated a “buy” by 67% or 16 out 24 analysts. The stock is rated a “hold” by six analysts and a “sell” by two analysts.

The leading beer, wine, and spirits producer is enhancing its profitability by focusing on high-end or premium beer, wine, and spirits products. Constellation Brands’ Mexican beer portfolio consists of popular imported brands like Corona and Modelo, which have been enjoying strong demand. The company has been significantly investing in the expansion of its production capacity to support high demand.     

Constellation Brands has also been in the news due to its significant investment in Canopy Growth Corporation (CGC), a leading cannabis and hemp company. With a $4 billion additional investment, Constellation Brands increased its stake in Canopy Growth to about 37%. Through this investment, Constellation Brands can capitalize on the tremendous growth opportunities in the cannabis and hemp market.

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