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UPDATE: Citigroup Reiterates On Constellation Brands Following 1Q Beat

Dwight Einhorn

In a report published Thursday, Citigroup analyst Wendy Nicholson reiterated a Neutral rating on Constellation Brands (NYSE: STZ), and raised the price target from $93.00 to $100.00.

In the report, Citigroup noted, “Fairly consistent with the scanner data in Nielsen-tracked channels, STZ's beer segment posted 14% sales growth in F1Q15 (although shipments and depletions were up a lesser 10.5% and 7.9%, respectively). Notably, 1Q sales growth benefitted from a relatively easy comp of +5% in the year-ago quarter (2Q comp is even easier at +3% sales growth and +1% shipments growth).

"Looking at margins, beer gross margin came in at 47% (600 bps ahead of our forecast) as STZ continues to see significant accretion from acquiring the Nava brewing facility. As a result, we note FY15 beer segment guidance was raised to reflect HSD depletion growth, 10% sales growth and underlying op income growth in the mid-teens.”

Constellation Brands closed on Wednesday at $90.45.

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