Brown-Forman upgraded to Overweight from Underweight at Morgan Stanley

Morgan Stanley double upgraded Brown-Forman to Overweight from Underweight with a price target of $75, up from $66. With the company’s gross margin “headwinds likely to turn to a tailwind” and reduced concerns over earlier U.S. spirits industry softness, the stock’s relative valuation is now compelling, the analyst tells investors in a research note. The firm expects the stock to appreciate as investors refocus on Brown-Forman’s “robust” 5%-7% long-term sales and high-single-digit operating income growth. Morgan Stanley now has significantly greater visibility around a gross margin recovery over the next 12-24 months, with spot prices for agave down 25%-50% over the past six months amid increased supply.