On Friday, Barclays made an adjustment to the price target for shares of Constellation Brands (NYSE:STZ), a leading beverage alcohol company. The price target was revised to $300.00 from the previous target of $309.00. Despite this change, Barclays maintained an Overweight rating on the company's stock.
The adjustment follows the company's recent release, which Barclays believes further demonstrates Constellation Brands' successful transition "from builder to operator." This shift is seen as a key factor contributing to the company's ongoing outperformance in the beer segment and the realization of significant cost savings within the organization.
According to the analyst's statement, the stock's recent underperformance may be attributed to market skepticism regarding the expected increase in depletions throughout the remainder of fiscal year 2025. Investors may also be interpreting that Constellation Brands is unlikely to lower its financial projections, contrary to some expectations.
Despite these concerns, Barclays remains confident in the company's prospects, particularly in beer net sales growth, which is anticipated to remain around +6%. The firm also positions itself near the midpoint of Constellation Brands' earnings per share (EPS) guidance, which ranges from $13.60 to $13.80, with a specific EPS estimate of $13.66.
In other recent news, Constellation Brands has seen a mix of developments. The company's second-quarter results showed a nearly 6% increase in net sales and a 13% growth in operating income in the beer business. Despite a decrease in Corona Extra sales, the management remains optimistic about the brand's performance for the remainder of the year. Other beer brands such as Modelo Especial and Pacifico showed positive trends, contributing to the overall resilience of the beer segment.
Several firms adjusted their outlook on Constellation Brands. HSBC cut its price target to $285, while Jefferies lowered theirs to $309, both citing challenges in the beer segment. Truist Securities also revised its sales and earnings per share estimates for the company, leading to a reduction in its stock price target to $255.00. However, they, along with Roth/MKM, Evercore ISI, and Goldman Sachs, maintained their Buy or Outperform ratings, expressing confidence in the company's growth.
Roth/MKM expects strong beer shipments to drive the company towards its FY25 guidance. Evercore ISI lowered its price target from $310.00 to $300.00, and Goldman Sachs maintained a steady price target of $300.
InvestingPro Insights
To complement Barclays' analysis of Constellation Brands (NYSE:STZ), recent data from InvestingPro offers additional context. The company's market capitalization stands at $44.77 billion, reflecting its significant presence in the beverage alcohol industry. Constellation Brands has demonstrated consistent profitability, with InvestingPro data showing the company has been profitable over the last twelve months.
One of the InvestingPro Tips highlights that Constellation Brands has raised its dividend for 10 consecutive years, which may be attractive to income-focused investors. This consistent dividend growth, coupled with a current dividend yield of 1.66%, underscores the company's commitment to shareholder returns.
Another relevant InvestingPro Tip indicates that Constellation Brands' liquid assets exceed its short-term obligations, suggesting a strong financial position. This aligns with Barclays' confidence in the company's operational transition and cost-saving initiatives.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Constellation Brands' financial health and market position.
The article is enriched with InvestingPro Insights
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