Constellation Stock Charges Toward Record High Ahead of Earnings

Constellation Brands reports earnings before the open on Thursday, Jan 6

Digital Content Manager
Jan 4, 2022 at 12:51 PM
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It's been an impressive couple of month for beverage maker Constellation Brands, Inc. (NYSE:STZ). The shares staged a sharp bounce off the $222 level in late November and quickly toppled pressure at the $240 area, going on to notch a series of record highs last month. The positive price action continues into today's trading, with STZ up 1.2% at $255.79, set to log its third-consecutive record close. Year-over-year, STZ is up nearly 18%. This all comes just ahead of the company's fiscal third-quarter earnings, due out before Wall Street opens on Thursday, January 6.

stz jan 4

Analysts are paying attention to this recent surge, and adjusting their price targets accordingly. Guggenheim lifted its price objective to $236 from $226, while Wells Fargo raised its estimate to $300 from $265. The 12-month consensus price target of $268.14 is a slim 5% premium to current levels, which could lead to more price-target hikes for the equity. There's still room for upgrades, too. Of the 23 in coverage, six still consider the stock a "hold" rating. 

The fresh high and slew of bull notes is drawing out options traders, with 1,920 calls exchanged so far -- double the intraday average, and nearly four times the number of puts traded. The most popular position is the January 260 call, followed by the weekly 1/7 270-strike call, where positions are being bought to open. This means traders are expecting even more upside for the underlying stock by the time these contracts expire on Friday. 

This bullish behavior has been the norm. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), STZ sports a 50-day call/put volume ratio of 1.63, which stands in the 98th percentile of its 12-month range. This means options traders are picking up long calls at a quicker-than-usual clip. 

Constellation Brands stock tends to do well after earnings, with five of its last eight post-earnings returns positive. The stock average a next-day move of 2.8%, regardless of direction, which is slightly lower than the 5.3% swing the options pits are pricing in this time around. 

 

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