Constellation Brands, Inc. (STZ) shares rose more than 2% after Goldman Sachs moved the stock to its Conviction List and raised its price target from $255 to $275 per share.

Key Takeaways

  • Constellation Brands stock moved higher after Goldman Sachs reiterated its Buy rating and raised its price target to $275 per share.
  • Analyst Bonnie Herzog sees a number of different catalysts that have made her incrementally more bullish on the stock.
  • While the stock is approaching overbought territory, it could have more room to run over the coming sessions, and the intermediate term looks bullish.

Goldman Sachs analyst Bonnie Herzog is "incrementally more bullish" amid faster and more profitable growth. In particular, Herzog believes that the market is underappreciating Modelo's distribution runway, Corona Hard Seltzer's scalability, and a positive packaging mix shift in beer that could pave the way to greater margin potential.

Last month, Constellation Brands reported fiscal third quarter financial results that exceeded expectations. Revenue rose 22% to $2.44 billion, beating consensus estimates by $220 million, while non-GAAP earnings came in at $3.09 per share, which beat consensus estimates by 68 cents per share.

Chart showing the share price performance of Constellation Brands, Inc. (STZ)

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From a technical standpoint, the stock moved to retest its prior highs from earlier this year during Tuesday's session. The relative strength index (RSI) moved toward overbought levels with a reading of 65.03, but the moving average convergence divergence (MACD) experienced a bullish crossover that could signal upside ahead. These indicators suggest that the stock could see some near-term consolidation before resuming its trend higher.

Tip

The crossover is a point on the trading chart in which a security's price and a technical indicator line intersect, or when two indicators themselves cross. Crossovers are used to estimate the performance of a financial instrument and to predict coming changes in trend, such as reversals or breakouts.

Traders should watch for a breakout from the stock's prior high close of $228.87 over the coming sessions. If the stock fails to break out, traders could see a move toward the 50-day moving average at $217.05 or reaction lows of $210.00. If the stock breaks out, traders could see a move toward trendline resistance at $245.00 over the coming sessions before seeing some consolidation.

The Bottom Line

Constellation Brands shares moved higher after Goldman Sachs reiterated its Buy rating and raised its price target to $275. Analyst Bonnie Herzog believes that the stock has room to run with a number of upcoming catalysts. While the stock is approaching overbought territory, it could post additional gains over the coming sessions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.