UBS Maintains a 'Buy' on Constellation Brands (STZ); Three Drinks Strong

UBS maintains a 'Buy' on Constellation Brands (NYSE: STZ), PT increased from $25 to $28.

UBS analyst said, "STZ drives earnings from a mix of wine, imported beer and spirits. In all three of these categories we see improving trends. Specifically, we believe the wine business will begin to grow inline with what is a strong category (+4% growth), while STZ’s “Focus” brands grow faster. After several years of weak performance, Crown is improving due to marketing/promo spending, shift to imports and new products. In spirits, Svedka is growing well ahead of the spirits and vodka categories, and low distribution should provide several years of growth."

"Based on management commentary on taxation, we are increasing our tax rate to 36% for 1Q (rate remains 29% for full-year). We phased the reversal equally over the remaining three quarters, resulting in a decrease of 1Q EPS estimate to $0.36 (from $0.39), while increasing the remaining three quarters by roughly $0.01 per. We also added a $500m share repo evenly over 3 years. Our FY12e is now $2.02."

For more ratings news on Constellation Brands click here and for the rating history of Constellation Brands click here.

Shares of Constellation Brands closed at $20.87 yesterday.

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