Goldman Sachs Defends Constellation Brands

Goldman Sachs Buy Constellation Brands (NYSE: STZ) price target of $189.00 (from $187.00)

Judy Hong defends Constellation Brands (NYSE: STZ) telling clients "We view today’s underperformance (STZ -7.1% vs. S&P 500 -0.1%) as outsized, as valuation is now pricing in a discount (19.2X NTM P/E vs. 21.6X Beverage average) despite a still best-in-class fundamental trajectory for STZ, while we see more clarity on potential impact in the event that a destination-border tax is implemented."

Hong is raising her FY17 and FY18 EPS from $6.48 to $6.74 and $7.90 to $8.04, respectively. Hong notes her EPS raises comes on the heels of a lower 2017 tax rate and declining dilution from Canadian wine divestiture.

She raises her price target from $187 to $189 and reiterates her Buy rating and keeps STZ on Goldman's Americas Buy List. Finally, she adds " We view risks as mostly manageable, but political headlines on tax reform could pose continued headwind to multiples near-term."

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 $146.75 yesterday.

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