Constellation Brands: Strong Performance and Positive Outlook Fuel Buy Rating

Analyst Filippo Falorni of Citi reiterated a Buy rating on Constellation Brands (STZ – Research Report), retaining the price target of $305.00.

Filippo Falorni has given his Buy rating due to a combination of factors, including Constellation Brands’ (STZ) impressive performance and positive outlook. The fourth quarter of fiscal year 2024 results for STZ exceeded expectations, showcasing a robust finish and a promising start to fiscal year 2025. STZ’s guidance for the upcoming year was also notably above the consensus estimates, which is particularly encouraging given the company’s typically conservative forecasting. Despite a marginal miss in beer margins due to one-time items, the anticipated operating margin recovery and the company’s solid top-line momentum, especially within its beer segment which accounts for a significant portion of profits, underpin Falorni’s optimistic stance.

The continued strength of STZ’s beer business is central to Falorni’s positive rating, as it represents the majority of sales and profits for the company. The business is not only expected to maintain a strong top-line growth but also to experience profit growth in the coming year. Additionally, management’s confidence in maintaining this momentum, coupled with strategic gains in distribution and opportunities for market share expansion in the on-premise segment, further bolsters the favorable outlook. Even though the Wine & Spirits (W&S) segment has underperformed, its impact is mitigated by its smaller contribution to overall profits and recent management changes that could lead to improvements. Overall, with an attractive valuation and a solid foundational performance, Falorni’s Buy rating reflects a belief in STZ’s potential for continued growth and profitability.

According to TipRanks, Falorni is a 2-star analyst with an average return of -0.6% and a 66.04% success rate. Falorni covers the Consumer Defensive sector, focusing on stocks such as Clorox, Coca-Cola, and Colgate-Palmolive.

In another report released yesterday, Barclays also assigned a Buy rating to the stock with a $294.00 price target.

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Constellation Brands (STZ) Company Description:

Founded in 1945, Constellation Brands, Inc. is engaged in the production, marketing, and distribution of beer, wine, and spirits in the United States, Mexico, New Zealand, and Italy. The company’s iconic beer brands include Corona Extra, Corona Light, Corona Premier, Modelo Especial, Modelo Negra and Pacifico. Its premium wine and spirits brands include Robert Mondavi, Kim Crawford, Meiomi, The Prisoner, SVEDKA Vodka, Casa Noble Tequila and High West Whiskey.