Constellation Brands Analysts Bullish After Q1 Print
Beverage company Constellation Brands, Inc. (NYSE: STZ) reported first-quarter results Friday that came in better than expected on the top-and-bottom line and prompted multiple Street analysts to reaffirm bullish stances.
The Analysts
BMO Capital Markets' Amit Sharma maintained an Outperform rating on Constellation Brands with an unchanged $225 price target.
Jefferies' Kevin Grundy maintained at Buy with a price target lifted from $264 to $274.
Bank of America Merrill Lynch's Bryan Spillane maintained a Buy rating with an unchanged $221 price target.
BMO: 'More Confidence' In Bull Thesis
Constellation's first-quarter report should give investors "more confidence" in the bull thesis, Sharma said in a Monday note.
The print also supports an outlook of at least a high-single digit core EPS growth through 2022 for three reasons, the analyst said:
Despite cold weather, the company still saw 6.6% beer depletion (sales-to-retailers) growth from increased marketing in Premier and a revival in Corona.
Power Brands saw 4.2% depletion growth, which reaffirms an "attractive picture" of the revived wine portfolio.
Constellation's core EPS guidance range of $8.65-$8.50 looks conservative given solid volume and pricing leverage, productivity benefits and favorable foreign exchange trends.
Jefferies: Conference Call Takeaways
Investor concern heading into Constellation's report may have been unfounded, as the company reported a solid earnings report, including topline growth, gross margin and earnings beats, Grundy said in a Sunday note.
During the post-earnings conference call, the company highlighted a strong start to the fiscal second quarter and specifically called out a focus "entirely around Refresca this [summer] season," the analyst said.
Hard seltzers realized a larger component of growth in the high-end category compared to prior periods, Grundy said.
On the other hand, management said it is "not pleased" with Canopy Growth Corp (NYSE: CGC)'s quarter but said that expectations moving forward are "mostly on track" to become a $1-billion run-rate business by the end of the next fiscal year, according to Jefferies.
BofA: 4 'Callouts' For New Quarter
Investors should be aware of four "callouts" for the fiscal second quarter, Spillane said in a Monday note.
They are:
The quarter includes lapping 10% beer depletion growth last year along with one less day in the current quarter.
Marketing spend for multiple brands will remain elevated.
A shipment timing benefit will impact beer volume growth and margins.
The 18% tax rate seen in the fiscal first quarter should remain similar.
Price Action
Constellation shares were down 1.84% at $193.32 at the time of publication Monday.
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Latest Ratings for STZ
Jul 2019 | Maintains | Hold | ||
Jul 2019 | Maintains | Buy | ||
May 2019 | Downgrades | Overweight | Equal-Weight |
View More Analyst Ratings for STZ
View the Latest Analyst Ratings
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