Constellation Brands reports earnings Thursday. What Goldman Sachs expects.

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Demand is healthy for Constellation Brands beer, says Goldman Sachs.

Photograph by Pawel Kadysz

Demand remains strong as inventories recover to normal at


Constellation Brands
,


Goldman Sachs

said, reiterating a buy note on the liquor stock ahead of its quarterly earnings release on Thursday.

Goldman analyst Bonnie Herzog said she sees a favorable setup for the stock, pointing to Nielsen data showing strong demand for the company’s beer brands, with sales volumes up 7, 5% in the fourth quarter compared to the previous year. The trend is led by Modelo Especial and Corona Extra, up 9.7% and 15.6%, respectively, in the quarter ending February.

Herzog’s reiteration of the buy rating comes after


Constellation Brands

offered additional information on its stocks and confirmed it was seeing strong demand at a recent industry conference. “We continue to believe that STZ is well positioned with its portfolio of strong/trusted brands and therefore reiterate our buy rating on the stock,” Herzog said in a research note.

The analyst expects Constellation’s momentum to continue in fiscal 2023. Herzog has a fourth-quarter earnings per share estimate of $2.21, while analysts tracked by FactSet s expect $2.09 per share.

Herzog expects management to be cautious in its performance guidance for fiscal 2023, forecasting net beer sales growth of 7% to 9%. That would be in line with preliminary guidance provided with its third-quarter results, it said.

The stock fell 0.3% to $230.34 on Wednesday. Goldman analysts have a target of $275 for the price.

Write to Karishma Vanjani at [email protected]

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