Constellation Brands Gains as Beer Giant Lifts Guidance Despite Earnings Miss

Constellation Brands shares gained over 2% on Thursday after the New York-based Fortune 500 international beverage alcohol company lifted its fiscal 2022 comparable earnings per share guidance, shrugging off disappointing fiscal second-quarter earnings data.

The corona beer marker reported quarterly adjusted earnings of $2.38​​ per share, missing the market expectations of $2.77 per share. However, the company’s revenue grew about 5% to $2.4 billion from a year ago, beating the Wall Street consensus estimates of $2.30 billion.

The beer giant lifted its comparable earnings per share, excluding Canopy EIE, in the range of $10.15 and $10.45, up from the previous forecast of $10.00 to $10.30. The company’s earnings per share (EPS) is expected to be in the range of $0.30 and $0.60, compared to the previous forecast of $2.70 to $3.00.

Following this, Constellation Brands shares rose over 2% to $216.51 on Thursday.

Analyst Comments

“We also now have greater LT clarity that beer demand is in strong shape as Constellation Brands (STZ) emerges from supply challenges, and that STZ has much better margin visibility than peers, with lower commodity exposure, less pronounced pressure from key commodities, and better pricing power. It seems clear that an improved absolute and even more so relative LT fundamental outlook for STZ should lead to multiple expansion, not the contraction we have seen recently,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“We understand that Delta variant concern has negatively impacted alcohol stocks, but beer has proven relatively demand immune with channel shifts even with higher COVID cases, and while Constellation Brands (STZ) credibility may have taken a hit with the Corona Seltzer disappointment, strategically, a lower eventual share level for the seltzer category is a clear positive for STZ, enabling higher potential STZ share of the high-end beer category. STZ seems to agree its stock is attractive here, with 2% of share repurchased in FQ2/September on top of 1% in Q1, which is another positive in our minds.”

Constellation Brands Stock Price Forecast

Ten analysts who offered stock ratings for Constellation Brands in the last three months forecast the average price in 12 months of $255.10 with a high forecast of $300.00 and a low forecast of $213.00.

The average price target represents a 17.55% change from the last price of $217.01. From those ten analysts, six rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $254 with a high of $302 under a bull scenario and $147 under the worst-case scenario. The firm gave an “Overweight” rating on the alcohol company’s stock.

Several other analysts have also updated their stock outlook. UBS raised the price target to $270 from $264. Jefferies lifted the target price to $305 from $300. Citigroup cut the price target to $239 from $257.

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