BofA update shows where active managers are putting money
Investing.com - UBS raised its price target on Constellation Brands (NYSE:STZ) to $205.00 from $195.00 on Thursday, while maintaining a Buy rating, despite the company reporting weaker-than-expected first-quarter results. According to InvestingPro data, the stock has shown resilience with a 7.8% gain over the past week, though it remains about 29% below its year-ago levels.
Constellation Brands reported first-quarter earnings per share of $3.22, falling short of Wall Street expectations due to softer organic sales growth amid a weaker beer category, ongoing macroeconomic headwinds, and volume declines across key brands. The company maintains a solid gross profit margin of 51.7%, though InvestingPro data shows eight analysts have recently revised their earnings expectations downward.
Despite the disappointing quarter, Constellation maintained its fiscal year 2026 guidance across all metrics, even after accounting for a $20 million incremental impact related to tariffs, indicating that the year is progressing as the company anticipated. Notable strengths include management’s aggressive share buyback program and a 10-year track record of consecutive dividend increases, with the current dividend yield at 2.35%.
UBS noted that while Constellation’s stock rose approximately 4% following the earnings report, investors may remain skeptical about a potential inflection in beer trends and could take a wait-and-see approach, particularly since "easy comps" in other consumer packaged goods categories have not always resulted in improved growth trends over the past year.
The investment firm still sees a path to low-single-digit top-line growth and mid-single-digit bottom-line growth over the long term for Constellation, with shares trading at approximately 13.5 times UBS’s revised next-twelve-months earnings per share estimate, suggesting a favorable risk/reward profile from current levels.
In other recent news, Constellation Brands reported first-quarter earnings for fiscal year 2026, which showed an earnings per share (EPS) of $3.22 and revenue of $2.52 billion, both missing analyst expectations. The EPS fell short of the anticipated $3.41, while revenue was slightly below the forecast of $2.56 billion. Despite these misses, the company maintained its full-year guidance, indicating confidence in its future performance. Analysts at RBC Capital reiterated an Outperform rating with a price target of $233, expressing optimism about the company’s near-term growth prospects. Goldman Sachs also maintained a Buy rating with a $225 price target, noting that the stock trades at a discount compared to industry peers. Meanwhile, BofA Securities raised its price target to $182 from $180 while keeping a Neutral rating, adjusting its full-year EPS estimate upward. Constellation Brands’ management remains focused on managing macroeconomic challenges and leveraging new product launches to drive growth.
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