Constellation Brands' Fundamental Backdrop Challenging but Focus Remains on Sustainability of Improved September Trends, UBS Says

MT Newswires Live10-09 03:19

Constellation Brands' (STZ) fundamental backdrop is challenging, but trading at a discount to packaged food and beverage alcohol peers is unwarranted due to its relatively favorable top and bottom line outlook, UBS said in a note emailed Thursday.

The company reiterated its fiscal 2027 guidance, while reporting fiscal Q2 adjusted earnings of $3.74 per diluted share on net sales of $2.63 billion, beating analysts' expectations.

The investor reaction to earnings was driven by management's commentary that trends improved in September and the high end of guidance could be achievable if trends continue in a similar direction, the firm said.

The focus remains on the sustainability of September's trends and what the guidance implies for the top-line and margin trajectory beyond fiscal 2027, according to the note.

UBS kept a buy rating on Constellation Brands and lowered its price target to $144 from $145.

Price: 122.31, Change: +3.92, Percent Change: +3.31

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