Morgan Stanley Reports Constellation Brands Remains Equal-Weight

According to Morgan Stanley, Constellation Brands STZ hosted an analyst meeting yesterday, during which the company gave a bullish presentation highlighting that they were well positioned to benefit from improving alcohol industry trends. Morgan Stanley said that there was not much new news outside of the fact that the Q1 tax rate is expected to be much higher than consensus (but FY guidance is unchanged) and STZ expects to be able to generate $2-$3 in long-term cost savings per case in its wine business by shifting its grape mix to lower cost regions. “This is a positive given it represents 16-26% of current equity income/EBIT, but is a modest one as it is likely to be a longer term process, given savings will likely be reinvested behind the business and carries execution risk (gray quality).” Constellation Brands closed yesterday at $22.71.