RBC Raises Constellation Brands Target to $226 from $220 on Strong Q2

RBC has raised its price target on Constellation Brands Inc. (STZ) to $226 from $220 after the alcoholic beverage company reported strong Q2 resuls. The firm maintained its outperform rating on the stock.

In a note to clients, RBC cited three main sources for upside from current levels: share gains in the U.S. beer category; renewed focus on volume growth through innovation in wine; and upside to volumes from the firm believes to be an under-appreciated spirits business.

“We continue to see the wine and spirits business as a source of long-term upside for STZ,” wrote RBC. “The company’s premiumization strategy is working and increased marketing drove 12% depletions among US focus brands.”

RBC raised its 2018 EPS estimate to $8.37 from $8.02, and said the increase is mainly attributable to the $0.39 Q2 beat, as well as the expectation for a lower tax rate.

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