STZ - Constellation Brands is defended by analysts after earnings day drop

Constellation Brands ( NYSE: STZ ) gained on Friday after analysts backed the upside for the stock, despite some earnings day jitters from investors.

Bank of America called the beer fundamentals at Constellation Brands ( STZ ) strong in reiterating a Buy rating.

Analyst Bryan Spillane and team said they remain positive on shares with STZ posting depletion growth of +8.7% in the quarter and QTD depletions up mid- to high-single digits.

"While the premium segment continues to outperform, STZ has levers at its disposals to ensure its products remain accessible to more price-sensitive consumers. For the first time in 14 quarters W&S (wine & spirits) generated positive depletion growth in the quarter (+1.2%) and Meiomi, The Prisoner and Kim Crawford continue to positively drive the portfolio."

The firm assigned a price objective of $275.

Cowen kept an Outperform rating on STZ and price target of $275.

Analyst Vivien Azer pointed out that STZ's beer top line was well-better than expected. She said it was appropriately conservative for guidance to be held in check given the macro backdrop. Important to the bull thesis, Azer noted STZ reached an agreement for a new greenfield brewery, which will be located in Veracruz, offering direct access to port shipping.

UBS also stayed positive on Constellation Brands ( STZ ) with a Buy rating reiterated.

Analyst Peter Grom said the path for STZ from here will largely hinge on whether management is simply being prudent with the outlook or if there is a reason trends are expected to slow in the back half of the year given the deteriorating operating backdrop. "With the potential for multiple expansion following the share conversion, guidance that seems achievable, and valuation that is still attractive relative to peers, we continue to believe the risk/reward skews to the upside," he noted.

Shares of STZ rose 1.44% in early trading on Fridat after falling 4.34% on earnings day.

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