On Friday, Piper Sandler initiated coverage on shares of Constellation Brands (NYSE:NYSE:STZ), a leading beverage alcohol company, with an Overweight rating and a price target of $300. The firm anticipates that Constellation Brands will continue to see sustainable share gains in the U.S. beer market, supported by favorable demographic trends and distribution channels.
The core products of Constellation Brands, including Modelo and Corona, are expected to propel long-term top line growth that aligns with the company's growth projections. Piper Sandler's outlook suggests that margin expansion for Constellation Brands is probable and that the company's financial targets are within reach.
In setting the price target, Piper Sandler applied a price-to-earnings (PE) multiple of approximately 20.0 times to the company's calendar year 2025 estimated earnings per share (EPS). This valuation is slightly above Constellation Brands' five-year historical average PE multiple of around 19.6 times. The firm's confidence in the company's performance is rooted in the strength of its beer segment and the expectation of continued growth in the industry.
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