STZ - Constellation Brands is defended at Morgan Stanley after earnings slide

Morgan Stanley reiterated a bullish view on Constellation Brands ( NYSE: STZ ) with the stock said to look much more compelling after a near -20% sell-off since early December.

Analyst Dara Mohsenian and team noted that they do think macros are having a negative and durable impact on STZ’s beer depletion growth,and expect depletion growth more in the ~6% range forward. However, the market is seen having priced too much concern into the alcoholic beverage stock, with thestock trading at 16X the firm's CY24 EPS despite offering robust high single-digit revenue growth.

There is also the historical record of STZ selloffs to consider. "Over the past 10 years, when STZ’s stock was down ~5% or more on EPS days, the stock gained 13% on average over the NTM," noted Mohsensian.

Morgan Stanley has an Overweight rating on STZ and price target of $277, which implies about 25% upside from the current share price.

STZ traded up 2.40% in Tuesday morning action.

Read the recent breakdowns on STZ from Seeking Alpha authors.

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