Morgan Stanley Maintains EW Rating On Constellation Brands

According to Morgan Stanley, Constellation Brands STZ EW rating is maintained. Morgan Stanley reported that it maintains its EW rating on STZ following better than expected Q4 EPS / F2012 guidance, with most of the upside in our minds driven by unsustainable items (i.e. lower taxes, shipments ahead of depletions). “While STZ has done a commendable job of pruning its product portfolio, improving margins / returns, and boosting free cash flow, we believe STZ shares are fairly valued at 8.5 times C2012e EV/EBITDA, albeit with a strong ~11% ongoing FCF yield. We are raising our F2012 EPS to $2.00, at the high-end STZ's $1.90–2.00 guidance, given a ~3-cent benefit from $200 million of share repurchases (not in STZ's guidance).” Constellation Brands closed yesterday at $21.79.