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Analyst maintains buy on Constellation Brands, steady stock target

EditorNatashya Angelica
Published 03/07/2024, 16:10
STZ
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On Wednesday, Jefferies reaffirmed a Buy rating on shares of Constellation Brands (NYSE:STZ), with a steady price target of $310.00. The firm highlighted the company's strong performance in beer depletions, which grew by 6.4%, surpassing the Street's forecast of 6.0%. Constellation Brands reported a solid quarter with total sales meeting expectations, although challenges persist in the wine and spirits segment.

The financial services company noted that for fiscal year 2025, Constellation Brands' guidance remains unchanged, suggesting a continuation of beer margin expansion. Beer margins improved by 259 basis points, exceeding expectations. Despite the ongoing difficulties in the wine and spirits division, the decline was mitigated somewhat by less reliance on price and mix changes.

Jefferies pointed out that while wine and spirits continue to face headwinds, the main focus is on whether beer depletions will sustain their momentum considering the current consumer weakness. The firm anticipates that management will maintain a stance of cautious optimism. Constellation Brands is scheduled to discuss these details further in a conference call at 10:30 AM ET.

The company's performance and future outlook, as noted by Jefferies, reflect a balance between robust growth in the beer segment and the more subdued results from wine and spirits. Constellation Brands continues to navigate the competitive and changing landscape of the alcoholic beverage industry.

In other recent news, Constellation Brands has been making notable strides in its performance and financial outlook. The company's first-quarter results showed a strong performance, particularly in the beer segment, which experienced a 6.4% increase in depletions, surpassing expectations.

This robust performance was coupled with an adjusted earnings per share (EPS) of $3.57, exceeding the Visible Alpha consensus estimate of $3.46. Despite underperformance in the wine and spirits division, Deutsche Bank (ETR:DBKGn) maintained a Hold rating on Constellation Brands, while CFRA upgraded its stance from Hold to Strong Buy, increasing the price target to $335.

Citi and RBC Capital Markets also maintained their positive ratings, anticipating year-over-year increases in beer sales and operating income. The potential sale of Constellation Brands' Mexicali Brewery and the nearing completion of its brewery expansion in Mexico are other developments of interest.

Both are expected to positively impact the company's cash flow and volume growth. These recent developments provide a snapshot of Constellation Brands' current standing and future prospects, as indicated by various analyst firms.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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