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Assessing Analysts’ Ratings on Constellation Brands Stock

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Current ratings

On March 31, 2017, 12 out of 18 analysts (or 67%) had “buy” ratings on Constellation Brands (STZ) stock. Six analysts had “hold” ratings on the stock, and no analysts had “sell” ratings on the stock. On March 21, JPMorgan Chase initiated coverage on STZ with an “overweight” rating.

On February 1, HSBC upgraded its rating for Constellation Brands stock from a “reduce” to a “hold” and raised its price target on the stock to $153 from $132.

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Consensus “buy” rating

Constellation Brands has been delivering impressive results in recent quarters on the strength of its Mexican beer portfolio, which includes popular brands such as Corona Extra and Modelo Especial. 

To support the continued demand for its imported beer brands, the company has been investing heavily in the expansion of its Nava Brewery production facility in Mexico.

The company is also constructing a facility in Mexicali, Mexico. President Donald Trump’s policies regarding Mexico, including potential taxes on imports, may impact STZ’s margins.

Two of Constellation Brands’ key peers are Anheuser-Busch InBev (BUD) and Molson Coors Brewing Company (TAP). With its acquisition of SABMiller, Anheuser-Busch InBev has further strengthened its leading position in the beer market. The company now owns seven of the top ten global beer brands and 18 brands that generate over $1.0 billion in retail sales.

In connection with this acquisition, Molson Coors acquired SABMiller’s 52% stake in MillerCoors, a joint venture between Molson Coors and SABMiller. Molson Coors is now the sole owner of MillerCoors.

Constellation Brands is also looking for growth in the premium product space, as indicated by its acquisitions of craft brewer Ballast Point, Prisoner Wine brands, and Meiomi. This premiumization strategy should help the company to expand its margin.

12-month price target

On March 31, the 12-month price target for Constellation Brands stock was $177.82. This price indicates a potential upside of 9.7%, compared to the stock’s closing price of $162.07 on the same date.

We’ll discuss the company’s valuation in the next and final part of this series.

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