STZ: Quick Take on Earnings

研报英文原文证据摘录

STZ: Quick Take on Earnings

Constellation Brands, Inc.

wine trends post divestiture. Our price target and implied return support our Outperform rating.

Risks to rating and price target

1. Slowdown in beer portfolio: If overall category weakness escalates or seltzers (other than Corona) begin taking more share

from imports, STZ’s portfolio could slow.

2. Mexico’s production issues and/or tariffs: STZ’s beer products are produced in Mexico. Reduced production capacity or tariffs

on imports could weigh on STZ’s sales/profitability.

3. Profit-squeezing innovation required to grow in wine: Innovation may be the way to grow volumes in the wine category, but

if it were to require a higher level of brand support than expected, margins could become compressed.

4. Unfavorable cannabis regulation: A lack of regulatory easing could limit growth potential, making the purchase price look

expensive. We also point out that there are relatively low barriers to entry, so it’s possible for pricing/margins to become an

issue down the road.

Conflicts policy

RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.

To access our current policy, clients should refer to

https://www.rbccm.com/global/file-414164.pdf

or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South

Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of research

RBC Capital Markets endeavors to make all reasonable efforts to provide research content simultaneously to all eligible clients,

having regard to local time zones in overseas jurisdictions. RBC Capital Markets provides eligible clients with access to Research