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Constellation continues climb, hits 52-week high

NEW YORK (AP) -- Shares of Constellation Brands Inc. hit a 52-week high Friday, continuing to gain after the wine, beer and liquor company reported higher quarterly results that topped expectations.

THE SPARK: The company, whose brands include Robert Mondavi, Clos du Bois and Simi, said it started the quarter by closing on its purchase of the remaining 50 percent stake in Crown Imports that it didn't already own. As a result, its latest results released before the market opened Thursday included a $1.6 billion gain tied to Crown, which brews Corona, Modelo and other brands.

THE BIG PICTURE: Constellation is a leader in the wine industry, with a large and diverse portfolio of brands. But Constellation's CEO has noted that the Crown Imports deal would be a "significant milestone" and "transformational step" in giving the company solid footing in the U.S. beer market.

ANALYSIS: Stifel analyst Mark Swartzberg said the results in the latest quarter indicated a "major pickup" in Corona Extra and Corona Light growth as Constellation aggressively increased summer promotions. Swartzberg said he expects the gains to slow down in the second half of the year.

He also noted that price increases seem to be sticking, and that about half of Crown's volume is undertaking a price increase.

Swartzberg raised his estimates for the current year and the next two years. He now expects the company to post earnings of $3.06 per share, up from $2.92, for the year ending in February. That puts him above the average $2.95-per-share forecast from analysts surveyed by FactSet.

He also raised his price target on the stock to $69, from $64.

SHARE ACTION: Shares of Constellation, based in Victor, N.Y., were added $1.24, or 2.1 percent, to $61.39 in Friday morning trading, after earlier reaching $62.13. The stock gained 2.5 percent in Thursday's session, and is up more than 74 percent over the past year.