TD Cowen Upgrades Constellation Brands (STZ) to Outperform, 'Set to Sizzle'

TD Cowen analyst Vivien Azer upgraded Constellation Brands (NYSE: STZ) from Market Perform to Outperform with a price target of $300.00 (from $240.00).

The analyst comments "While STZ had to take on debt to buyout the Sands family, that move has meaningfully de-risked the capital allocation story. What's more, while higher interest expense looks to be a ~430 bps drag to FY24 net income growth, we expect that with deleverage, that will become a ~140 bps tailwind in FY25. And, once the company finishes its $4.0-4.5 bn in beer capex in FY24-26, we expect STZ is well-placed to buyback at least $1 bn in stock per year. A sale of the wine and spirits business could also be a consideration, in our view, as that would provide an incremental $4+ bn for buybacks, and also raise the multiple by eliminating the drag from this slower/no growth business with a dilutive segment level margin. We hope to here more on this front at the company's analyst meeting on November 2nd."

For an analyst ratings summary and ratings history on Constellation Brands click here. For more ratings news on Constellation Brands click here.

Shares of Constellation Brands closed at $257.50 yesterday.

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