On Wednesday the Treasury Wine Estates Ltd (ASX: TWE) share price had one of its best days of trade in the last few months when its surged 3% higher to $14.61.
This solid gain narrowed the wine company's three month decline to 20%.
Why is the Treasury Wine Estates share price down 20% over the last three months?
The global wine company's shares have come under pressure in recent months due to concerns over the growth of its U.S. business and the oversupply of its wine in the China market.
Analysts at Citi have been amongst the most bearish on the company and recently slapped a sell rating and $14.50 price target on its shares.
It made the move due to concerns that the market may be too optimistic on just how quickly its Americas business can improve its earnings.
According to the note, its research was pointing to declines in the sales of its large volume brands including Beringer, BV Coastal and Lindemans in the Americas market.
But not everyone feels the same way. One broker that is bullish on Treasury Wine Estates is Morgan Stanley. It recently retained its overweight rating and placed a price target of $17.00 on the company's shares.
This price target implies potential upside of over 16% for its shares over the next 12 months.
According to that note, Morgan Stanley believes that a slowdown in the China market is only temporary and that investors ought to look beyond the short-term weakness to the sizeable long-term opportunity.
Furthermore, with its shares falling meaningfully over the last three months and trading cheaply in relation to its global peers, the broker felt now would be an opportune time to invest.
Should you invest?
While I do think that Citi makes some fair points, I would side with Morgan Stanley on this one and suggest investors consider picking up shares.
Based on its current share price I think Treasury Wine Estates is a great option for patient long-term investors along with the likes of fellow exporters A2 Milk Company Ltd (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL).
