Constellation Brands (STZ) is likely to see limited downside on its share price as the current valuation is implying no long-term growth, RBC Capital Markets said in a note Monday.

"At its current Street valuation (12.1x FY26E EPS), STZ shares imply 0% topline growth long-term, which places it in line with long-term beer category growth, in our view an unrealistic assumption," RBC analysts, including Nik Modi, said.

The analysts said they were adding the stock back to their "top ideas" list following market reaction to its Q3 results that were "tough" as they expected.

The report said the issue with STZ's beer business is mostly cyclical rather than structural, implying that the stock has overreacted to the downside. It pointed to key catalysts that should help unlock its upside, including for the company to lower its medium-term beer algorithm.

"Even if we are wrong on these points, we believe the downside is limited given the stock's current valuation," the analysts said.

"To be clear, we continue to have the utmost confidence in STZ's fundamentals, particularly in the beer business," they said.

RBC cut its price target on the stock to $293 from $308 while keeping its outperform rating.

Price: 187.10, Change: +5.29, Percent Change: +2.91