Constellation Brands could be poised for a breakout after a 3% sell-off Wednesday and a lukewarm first half of 2024, according to JPMorgan. Shares of the beer maker are ahead almost 4% in 2024, lagging the broader market. Constellation posted better-than-expected fiscal first-quarter results on Wednesday for the quarter ending in May, topping Wall Street’s estimates on the top and bottom lines. However, the beat wasn’t enough to assuage investor worry over weakness in Constellation’s wine and spirits business and led to the stock selling off. JPMorgan analyst Andrea Teixeira said the sell-off was “unjustified” and noted that the recent pullback could present a buying opportunity for investors to capture potential margin improvement thanks to stronger beer sales. STZ YTD mountain Constellation Brands shares in 2024. JPMorgan reiterated an overweight rating on the brewer and raised its price target to $320 per share from $291 in a July 3 note. The bank’s forecast implies about 28% upside from Wednesday’s $250.37 close. Constellation Brands, home to beer brands Modelo Especial and Corona, is the largest domestic beer importer. “Given favorable secular trends in U.S. alcoholic beverage consumption, including premiumization and faster growth in legal-drinking age Hispanic consumers, and further distribution runway for powerhouse Modelo Especial and emerging brands, we view the company’s long-term revenue growth targets for its core beer segment as achievable,” the analyst said. Teixeira also addressed concerns tied to Constellation’s wine and spirits segment, which she says will improve with time as margins grow and the company “premiumizes the portfolio.” “Moreover, the company has taken steps to improve governance and capital allocation decisions, which could result in a more supportive shareholder base over time,” she said.
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