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UPDATE: Bank of America Raises PO to $26 on Constellation Brands


Bank of America increases its price objective to $26 on Buy-rated Constellation Brands (NYSE: STZ) on encouraging trends into the end of the year.

Bank of America says, "We are raising our FY13E EPS from $2.23 to $2.30 and our FY14 from $2.08 to $2.15. Improved outlook for wine is the main driver. We are increasing our Price Objective as trends have improved recently in both wine and beer. Recent scanner data shows STZ's volume share has improved c.50bps the last two quarters, due to more promotions and advertising. New products in sweet wines should also help. In addition, the California grape harvest was down by 7% in 2011 and there are early indications that supply is tightening. This could be constructive for industry pricing and STZ's market share. Also, beer volume is bouncing back. Based on our analysis, STZ could comfortably establish a $125mn annual dividend just from its wine cash flows."

STZ closed at $22.82 a share yesterday.


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