Constellation Brands ‘set to sizzle’ declares TD Cowen

TD Cowen raised Constellation Brands (NYSE:) to Outperform from Market Perform and raised the price target to $300 from $240 per share in a note Wednesday.

The analysts declared that the company is “set to sizzle” and that the firm is constructive on several factors for STZ.

“We are constructive on: 1) accelerating beer growth in Nielsen-tracked channels, which de-risks margins, 2) the success of Modelo Oro in particular, 3) re-accelerating earnings growth on better beer growth and deleverage, and 4) the potential for larger shareholder returns with a wine/spirits sale,” they explained.

TD Cowen contends that STZ’s beer growth is accelerating, and they believe there is now upside potential to consensus in FY24, as the company has had a strong summer selling season.

“We model 7.6% total company revenue growth in FY24, and 7.0% in FY25, driven both by continued strength in beer, as well as an abating drag from wine and spirits,” the analysts added.

In addition, they said that “with accelerating beer growth, we believe that current beer margin guidance (38%-39%) is achievable, with potential upside to our conservative 38.1% estimate.”