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Why Analysts Expect Constellation Brands’ Stock to Keep Rising

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Stock on the rise

Constellation Brands’ (STZ) stock price has surged by 11.9% to $157.37 since the start of 2016, as of April 7, 2016. Constellation Brands’ stock price rose 5.9% on April 6, the day the company announced its results from fiscal 4Q16 and fiscal 2016, which ended February 29, 2016. Constellation Brands’ stock reached its 52-week high of $160.39 on April 6. As discussed in the first two parts of this series, Constellation Brands exceeded analysts’ earnings and sales expectations in fiscal 4Q16.

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Comparison with peers

Constellation Brands’ stock has outperformed other alcoholic beverage stocks on a YTD (year-to-date) basis. As of April 7, the stock prices of Anheuser-Busch InBev (BUD) and Brown-Forman (BF.B) have fallen 1.2% and 1.7%, respectively. The stock price of Molson Coors Brewing Company (TAP) has been flat on a YTD basis.

Constellation Brands has also outperformed the Consumer Staples Select Sector SPDR Fund (XLP) on a YTD basis. XLP, which has 2.2% exposure to Constellation Brands, has risen 6.6% YTD. The broader Market, represented by the S&P 500 Index, has risen 1.5% YTD.

Analysts’ recommendations

As of April 7, 14 out of 22 analysts have given Constellation Brands a “buy” recommendation. Six analysts have given it a “hold” recommendation, and two analysts have given it a “sell” recommendation. The consensus “buy” recommendation for Constellation Brands’ stock is backed by its impressive performance in fiscal 2016, continued demand for its Mexican beer brands, and the favorable impact of strategic acquisitions like those of craft brewer Ballast Point and wine brand Meiomi.

As of April 7, the 12-month target price for Constellation Brands’ stock is $175.63, which reflects the potential for a rise of 11.6%.

We’ll look at the company’s outlook for fiscal 2017 in the next part of this series.

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