Constellation Brands (NYSE: STZ) stock dropped nearly 6% this week after news broke of the lawsuit filed by Anheuser-Busch (NYSE: BUD) over the Corona hard seltzer launch. A senior beverage analyst questions the lawsuit’s impact on company results, however, saying the drop creates an opportunity to buy.

After reaching a 52-week high on Friday, February 12, investors digested the potential impact of the lawsuit, and stock dropped some $14.16, to close yesterday at $228.46, or 5.8%. Market cap is now $44.36 billion.

The high-flying stock has grown from a low of $104.28, reached intraday on March 23, 2020, during the midst of the market panic around the coronavirus economic impact. A trendline from April 9, 2020, after the initial sharp rebound from that low, indicates the stock has somewhat steadily increased some 37.4%. Earnings reports point to positive results from its diversification into the hard seltzer category.

In Tuesday trading, shares dropped 3.84% to close at $232.00, in a mixed market day for Wall Street. The Dow Jones Industrial Average (DJIA) rose 0.20% on Tuesday to close at 31,522.75, but the S&P 500 Index (SPX) was off 0.06% to close at 3,932.52.

Many are questioning the ability of A-B to win the court case, which alleges that it never meant to allow Constellation to produce Corona hard seltzer, when signing over US rights to the brand in

Bonnie Herzog, Managing Director at Goldman Sachs, and its senior beverage analyst, reiterated her target of $275 per share for Constellation. Herzog noted the company can post “faster and more profitable growth” than competitors.

Aiden Gentson
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