Constellation Brands might bounce practically 20% on resilient client demand for beer, BMO says

Shares of Constellation Brands will get a lift as demand for beer stays sturdy, in response to BMO. Analyst Andrew Strelzik initiated protection of Constellation Brands with an outperform ranking, saying that the guardian firm behind imported Mexican beer manufacturers Modelo and Corona within the U.S. will proceed to see sturdy demand for its merchandise. “We have seen no signs of slowing consumer spending on STZ’s key beer brands and expect continued resiliency,” Strelzik wrote. “Despite evidence of changing consumer behavior in other food/beverage categories, measured channel data for STZ’s beer brands and Mexico beer import data remains consistent with — if not ahead of — prior months. We expect continued resiliency.” The analyst expects Constellation Brands has “ample room” to develop distribution outdoors of its core area, and maintain sturdy gross sales of beer within the coming years. This helps a view that there’s potential upside to the corporate’s beer income steerage. “We believe STZ is an attractive investment with favorable risk/reward as it balances a solid multi-year growth outlook with a valuation discount to peers that is too wide. We see potential upside to FY23 Beer revenue guidance and expect EPS growth to reaccelerate in FY24,” Strelzik wrote. Constellation has a $290 value goal, implying roughly 20% upside from Monday’s closing value of $244.15. The inventory has outperformed the broader market this 12 months, falling simply 2.7%. —CNBC’s Michael Bloom contributed to this report.