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On Friday, Piper Sandler analysts increased the price target for Constellation Brands (NYSE: NYSE:STZ) to $170 from $165, while maintaining a Neutral rating on the stock. This adjustment reflects recent developments within the company and broader market conditions. According to InvestingPro analysis, the stock appears undervalued at current levels, trading near its 52-week low of $160.46.
The analysts highlighted ongoing challenges faced by Constellation Brands, particularly in relation to its core Hispanic consumer base. These consumers are reportedly experiencing financial pressure, leading them to seek value through changes in purchasing channels and pack sizes. Despite these consumer headwinds, the analysts revised their estimates following Constellation Brands’ recent $900 million debt tender. The company, with a market capitalization of $30.32 billion and annual revenue of $10.2 billion, has maintained strong dividend growth of 14.61% over the last twelve months.
Following the closure of a mainstream brand divestiture on June 2, Constellation Brands is expected to realize cost savings more quickly in its Wine & Spirits segment. While the Fiscal Year 2026 earnings per share (EPS) estimate remains at $12.60, the Fiscal Year 2027 EPS estimate has been raised from $13.55 to $13.85.
The analysts’ decision to raise the price target reflects an anticipated faster realization of cost savings and adjusted financial estimates, despite the persistent challenges in consumer sentiment.
In other recent news, Constellation Brands has completed the sale of several mainstream wine brands to The Wine Group, a move that aligns with its strategy to focus on premium wine and spirits. This divestiture is expected to enhance the company’s performance in the upscale segment without altering its financial outlook for fiscal years 2026 through 2028. Additionally, Truist Securities has upgraded Constellation Brands’ stock rating from Hold to Buy, raising the price target to $215. This upgrade is based on a consumer behavior study that suggests market pessimism about alcohol consumption trends may be overstated.
Constellation Brands has also priced a $500 million senior notes offering, with proceeds intended for general corporate purposes, including debt reduction and capital expenditures. The company has refinanced and extended its $2.25 billion credit facility, which now matures in 2030, providing greater financial flexibility. Furthermore, Moody’s has upgraded Constellation Brands’ senior unsecured ratings from Baa3 to Baa2, reflecting expectations of stable debt-to-EBITDA leverage and strong margins in the coming years. The company plans to use proceeds from its wine brand sales to repay debt and repurchase shares, contributing to increased financial flexibility.
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