Constellation Brands' (STZ) beer volume inflection is becoming more visible as momentum improves and the market looks past conservative fiscal 2027 guidance following better-than-expected fiscal Q4 results, Morgan Stanley said in a Friday note.
The company's beer depletion in fiscal Q4 increased 0.6% year over year, its first positive depletion growth in the last five quarters, the investment firm said. Constellation Brands also expressed optimism over its fiscal 2027 beer margins, with a buffer on costs from extensive input hedging and the rescission of tariffs on its beer imports.
Apart from positive depletions, drivers include increasing volumes and market share in the US, easy comparisons, improving Hispanic consumer trends and an upcoming catalyst from the FIFA World Cup, Morgan Stanley said.
Constellation Brands, however, still guided fiscal 2027 beer sales in the range of a 1% increase to a 1% decline due to volatile macro conditions and consumer trends, the brokerage noted, adding the outlook appears conservative given improving scanner data.
Morgan Stanley raised its price target on Constellation Brands to $183 from $160, with an equal-weight rating.
Shares of Constellation were up nearly 3% in Friday trading.
Price: 167.50, Change: +4.43, Percent Change: +2.72
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