Constellation Brands Analysts Remain Bullish After Q4 Earnings Rally

Wall Street analysts remain bullish on Constellation Brands, Inc.STZ after its strong fourth-quarter results.

Constellation Brands earned $1.19 per share in the fourth quarter on revenue of $1.543 billion. The company's beer operating income rose 29 percent, and it saw a 14 percent increase in wine and spirits operating income due to the Meiomi acquisition.

Following are various Street analysts' takes on the results.

Related Link: Cramer: Constellation Brands Can "Take Over The World"

SunTrust: Buy, PT Up From $170 To $180

Analyst William Chappell, Jr, in a client note, said, "Following STZ's F4Q results and initial FY17 guidance we are raising our FY17 and FY18 EPS estimates to $6.25 and $7.13, respectively (from $6.17 and $7.03) and raising our price target to $180 from $170 (25x FY18 EPS)."

"We reiterate our Buy rating as we believe the current momentum for both the Beer and Wine segments is sustainable and the initial FY17 guidance will likely prove conservative."

UBS: Neutral, PT Raised From $162 To $173

Analyst Stephen Powers said, "STZ's fundamental strength shows few signs of waning; however, both the cost of growth and valuation give us pause."

"STZ's Q4 results and FY17 outlook generally validated our thinking on the stock—we still believe the company can maintain its top-line and P&L momentum in the near-term, fueled largely by distribution gains, packaging/product innovations and brand investments."

However, the analyst noted, "We still do not expect STZ to achieve $1+ billion in FCF until FY19. Moreover, in the longer-term, we think the wide gap between flattish US beer category growth and STZ's performance raises questions regarding the sustainability of top-line momentum, further keeping us on the sidelines."

The analyst now expects $6.37 in FY17 EPS, lower than $6.23 expected earlier.

Stifel: Buy, PT Hiked From $174 To $189

Analyst Mark Swartzberg noted: "We lift our estimates and target ($189 per share, was $174 per share), viewing the top end of Constellation's newly issued FY17 earnings outlook as likely and consideration of a partial-IPO of Canada as evidence the company is open to ultimately separating into two companies: U.S. imported and craft beer, global wine & spirits (weighted to North America)."

The analyst raised his FY17 EPS view to $6.30 from $6.09.

Regarding the Canada Partial IPO, the analyst said, "Seemingly, the most mysterious element of Wednesday's news is management's exploration of a potential partial IPO of its Canada business, generating estimated EBITDA of $75 – $112 million."

He continued, "This may be solely a ‘for sale' sign, as it turned out to be for Ballast Point. We believe it is more too. i.e. a way of exploring other options for higher value for the entirely of the company's wine & spirits business, operating n and selling overwhelmingly into the U.S."

Related Link: Goldman On Constellation Brands Following Q4 Results: "The Best Is Still To Come"

And Others

Meanwhile, Goldman said "the best is yet to come" from Constellation Brands. The brokerage maintained its Buy rating and increased price target on the stock to $180.

In addition, Barclays maintained its Overweight rating on Constellation Brands, and raised its price target to $170.

Shares of Constellation Brands were down 2.22 percent to $156.71.

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