Brown-Forman (BF.A, BF.B) still faces pressures from overall trends in the spirits segment and lingering weakness in Jack Daniel's Black Label, even as US markets show early signs of improvement and recent share gains continue, RBC Capital Markets said Monday in a report.

The company's share gains have averaged about 10 basis points a month over the past five months, driven almost entirely by Jack Daniel's Blackberry, which is off to a strong start, the report said. A rebound in Black Label is key to signaling a sustainable brand recovery, RBC said.

With Brown-Forman set to report fiscal Q3 results on Wednesday, RBC estimates EPS of $0.44 and net sales of $963 million, compared to consensus estimates of $0.47 a share and $1 billion in sales.

RBC expects the company to reiterate full-year guidance, "but we are still more comfortable at the lower end."

"While innovation has been off to a strong start, we still expect the category recovery to be non-linear," the report said.

RBC rates Brown-Forman stock as sector perform with a price target of $30.