Analyst Gerald Pascarelli from Needham maintained a Buy rating on Constellation Brands (STZ – Research Report) and keeping the price target at $215.00.
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Gerald Pascarelli has given his Buy rating due to a combination of factors that highlight both challenges and strategic moves by Constellation Brands. The company delivered a strong fourth-quarter performance with better-than-expected topline and EPS results, despite a slight decline in beer depletion. This performance, however, is overshadowed by the company’s strategic decision to sell its low-end wine business, which is expected to streamline operations and potentially improve financial outcomes.
Despite the lowered outlook for beer sales growth, which has been adjusted to a modest 2-4% for FY27/28, this reset is seen as a realistic adjustment that positions the company to meet its new targets with potential upside. Additionally, the sale of the low-end wine business, while not comprehensive, is a positive step towards addressing underperforming segments. The company’s guidance on tariffs, particularly concerning Mexico and Canada, remains a point of uncertainty, but the anticipated impact is less severe than worst-case scenarios, suggesting a manageable risk. Overall, these factors contribute to a favorable long-term outlook for Constellation Brands, justifying the Buy rating.
In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $203.00 price target.
Based on the recent corporate insider activity of 45 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of STZ in relation to earlier this year.