Deutsche Bank analysts released their outlook on Constellation Brands, Inc. (NYSE:STZ) ahead of the company’s upcoming Q1 earnings, expected to be reported on June 30.
Amidst a deteriorating market backdrop, rising rates, and record inflation, the analysts see investors as fairly divided with respect to the company. On the one hand, bears see elevated trade-down risk to its above premium beverage alcohol portfolio and view the company's reticence to take a more meaningful price in beer to offset inflation as evidence of a lack of true pricing power.
Bulls, however, continue to see strong execution in beer and improving performance in wine & spirits, ample growth opportunities, and moderating inflationary headwinds positioning the company to achieve, if not beat, its 2023 outlook.
Overall, the analysts take a more neutral stance, with their estimates biased higher on revenues versus consensus estimates heading into Q1/23 results, but lower on margins given incremental gross margin headwinds and elective investments in SG&A and other capabilities. The analysts lowered their price target on the company’s shares to $248 from $250, while reiterating their hold rating.