Constellation Brands Reaching for the Sky While Beam is Brought Back Down to Earth

Reveling in premature summer weather, St. Patrick's Day and the usual promise that everybody's working for the weekend, booze is selling well in America. Constellation Brands STZ has seen strong sales growth in both beer and wine throughout the last 12 weeks. Ahead of results, Goldman Sachs has upgraded the wine and spirits brand in an effort to search for better value. “Fundamentals in spirits and wine remain attractive in our view with both categories seeing healthy volume growth, trading-up to the premium priced segment, and improving pricing trends. We are upgrading STZ to Buy from Neutral due to improving fundamentals and a more compelling [valuation],” Goldman Sachs said in a research report. Knocking ‘em back does not only apply to the drinks in this instance, as Goldman Sachs proceeded to then bump Beam BEAM down from a Buy rating to Neutral. “Our positive view of the fundamental story is unchanged: a share gainer in spirits due to its position in bourbon and its innovation capabilities, as well as being an attractive strategic asset in a consolidating spirits industry. However, we no longer see upside to our upwardly revised price target and see better opportunities elsewhere in our coverage,” Goldman Sachs explained. And the industry shake-up does not end there. It was reported earlier today that Molson Coors Brewing Company TAP announced a definitive agreement to acquire StarBev, a Central and Eastern European Brewer. As the competition brews between TAP and STZ, analysts continue to comment on the surprises Constellation has reported in the past and the expectation that the company will once again shock them this time around. According to NASDAQ, “With respect to earnings surprises, Constellation Brands has topped the Zacks Consensus Estimate over the last four quarters in the range of flat to 34.6%. The average remained at positive 18.9%, suggesting that Constellation Brands has surpassed the Zacks Consensus Estimate by that measure in the trailing four quarters.” Soon, analysts will be put out of their misery, as the fermenting period will end on Thursday, April 5th when Constellation reports its earnings before market open. STZ and BEAM are both currently trading above S&P500, with STZ up +18.78% YoY and BEAM up +30.91% YoY. Comparatively, TAP is trading below S&P500, down -5.96%.