Constellation Brands, Inc. STZ seems poised to come out of the pandemic in a stronger position, as depletions in beer remain robust and the company moves past overhangs like the Gallo transaction, according to BofA Securities.
The Constellation Brands Analyst
Bryan Spillane maintained a Buy rating on Constellation Brands and raised the price target from $190 to $220.
The Constellation Brands Thesis
Constellation Brands reported first-quarter adjusted earnings for fiscal 2021 at $2.30 per share, beating the BofA estimate of $2.10 per share, with the upside being driven by better operating margins in both the beer and wine and spirits segments, Spillane said in the Thursday note. (See his track record here.)
The beverage company has done a good job managing beer production through COVID-19, “with a focus on keeping top performing SKUs including Modelo & Corona in-stock.”
Spillane expressed optimism regarding Constellation Brands continuing to gain market share during the upcoming July 4 weekend, “as in-stocks in the off-premise channel will be increasingly important as consumer shift drinking occasions to at home.”
The analyst raised his earnings estimates for fiscal 2021, 2022 and 2023 from $8.11 per share to $8.80 per share; from $8.84 to $9.65; and from $9.85 to $10.74, respectively.
STZ Price Action
Shares of Constellation Brands were nearly flat at $186.01 at the time of publication.
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