On Thursday, Bernstein analysts maintained their positive outlook on Constellation Brands (NYSE:STZ) shares but adjusted the price target downward to $315 from the previous $325, while keeping an Outperform rating on the stock. According to InvestingPro data, the stock is currently trading near Fair Value at $219.28. The revision reflects concerns about the potential impact of unilateral import tariffs, especially those that might target Mexico, a key market for the company.
Constellation Brands, recognized for its strong presence in the U.S. beer market and generating $10.19 billion in revenue, continues to see growth opportunities, particularly with its Modelo and Pacifico brands. With a market cap of $39.81 billion and steady revenue growth of 4.14%, the company maintains a FAIR financial health rating on InvestingPro.
Bernstein's analysts expect a roughly 13% normalized earnings per share (EPS) compound annual growth rate (CAGR), noting that the stock is currently valued attractively at approximately 12.8 times price-to-earnings (P/E) based on next twelve months plus one (NTM+1) estimates.
Despite the positive performance forecast, the threat of import tariffs poses a significant risk to Constellation Brands, with the potential to be the most adversely affected company within Bernstein's coverage. For deeper insights into tariff impacts and other key metrics, check out the comprehensive Pro Research Report available on InvestingPro.
The analysts believe that while the stock remains appealing, the looming uncertainty around tariffs is likely to hinder its performance.
The new price target of $315 is derived from a lowered target P/E NTM+1 multiple, which has been adjusted from 20 times to approximately 18.5 times. This change is intended to mirror the uncertainty tariffs introduce, although Bernstein's earnings forecast for Constellation Brands remains largely the same after updating for scanner data. The company maintains strong fundamentals with $3.89 billion in EBITDA and analyst targets ranging from $241 to $315.
In other recent news, Constellation Brands has been the subject of several analyst reviews and significant business developments. RBC Capital Markets maintained their Outperform rating on the company, citing strengths in Constellation Brands' beer segment despite broader weakness in the consumer packaged goods category. They also projected a compounded annual growth rate of 7-9% in beer top-line revenue over the next three years.
UBS also maintained a Buy rating on Constellation Brands, despite reducing their price target ahead of the company's third-quarter earnings report. The firm noted the company's strong financial health and suggested that the risk/reward ratio could still be favorable for the stock, despite recent underperformance and investor caution.
Citi reaffirmed its confidence in Constellation Brands, maintaining a Buy rating and a steady price target. They anticipate the company's third-quarter fiscal 2025 results to show beer depletions around 4-5%.
Bernstein maintained its positive stance on Constellation Brands, reiterating an Outperform rating and a price target. The firm highlighted the potential benefits of Constellation's recent strategic moves, particularly in relation to its Wine & Spirits segment.
Constellation Brands recently announced the divestiture of its Svedka vodka brand to Sazerac, aligning with the company's strategy to focus on the premium segment of the wine and spirits market. Citi analysts expressed a positive outlook on the sale.
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