Constellation Brands Inc: Q1 Upside and World Cup Boost, But Weak LT Industry Trends

研报英文原文证据摘录

Constellation Brands Inc: Q1 Upside and World Cup Boost, But Weak LT Industry Trends

ramework

** = Based on consensus methodology

beer topline to reflect limited visibility. We remain EW longer-term on concerns § = Consensus data is provided by Refinitiv Estimates

e = Morgan Stanley Research estimates

about secular headwinds to alcohol consumption and some maturation in STZ's

portfolio at higher share levels, but see the glass as half full short-term with

declining gasoline prices, improved STZ market share trends in scanner data, and

moderating social pressures on STZ's Hispanic consumers. STZ also continues to

repurchase its stock, buying back $324M (~1.3% of current market cap) FYTD

through June. STZ gave unquantified color on June depletions (improvement on both

World Cup performance and overall consumer sentiment) on the call, noting a

recovery vs April/May but less robust trends than March, which we think was less of

a recovery than expected. STZ's new CEO also noted white space opportunity is an

area of focus on the call on a selective basis and is looking to reinvigorate

excitement around larger brands Corona Extra and Modelo Especial, while driving

continued growth in smaller brands. Our EPS forecast remains slightly above (by

0.3%) the high-end of STZ FY27 EPS guidance, which seems conservative. Post Q1,

we lower our PT to $158 from $183 with weak industry trends, based on 12.5 times

CY27 EPS.

Beer Depletions Down Slightly, In Line With Expectations: FQ1 beer depletions Morgan Stanley does and seeks to do business with

were down -0.3% yoy, in line with the -0.2% consensus and buy-side expectations of companies covered in Morgan Stanley Research. As a result,

investors should be aware that the firm may have a conflict of

flat to -1%.