Morgan Stanley Reiterates Equalweight Rating on Constellation Brands (STZ)

Morgan Stanley analyst Dara Mohsenian reiterated an Equalweight rating and $195.00 price target on Constellation Brands (NYSE: STZ).

The analyst comments "Stock Context: Remain Equal-Weight on STZ with ST/LT Volume Pressures but Compressed Valuation: We see short-term and long-term pressures on STZ's beer volumes. As we discussed in our comprehensive report here, beyond ST macro pressure, which is clear, we are cautious on alcohol demand LT due to secular health/wellness pressure building with a lack of innovation answer given the difficulty in taking calories out of alcohol, more severe health/wellness consequences from alcohol products, generational pressure from lower PCC among younger generations than past generations, wider cannabis substitution, and modestly decelerating pricing power on top of volume woes. STZ also faces company specific longer-term headwinds from the maturation of its brand portfolio. As we discuss below, STZ's (and overall alcohol) buy rates (spend per household) in Numerator panel data have been soft across income buckets and demographics, suggesting the weakness is more than macro/Hispanic-driven. Additionally, as we discuss in more detail here, we do see shorter-term pressures for STZ from macro headwinds, unfavorable weather, and Hispanic consumer sentiment, and improved ABI (covered by Sarah Simon) US market share trends. That being said, these pressure points are well known and seemingly more priced into valuation to a large extent after a YTD stock pullback."

For an analyst ratings summary and ratings history on Constellation Brands click here. For more ratings news on Constellation Brands click here.

Shares of Constellation Brands closed at $164.49 yesterday.

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