This analyst says Constellation Brands is a “Top Pick”

Roth Capital Markets analyst Bill Kirk reiterated his “Top Pick” and “Buy” rating on Constellation Brands (Constellation Brands Stock Quote, Chart, News, Analysts, Financials NYSE:STZ) and maintained his $209.00 target after fourth-quarter results “with conviction,” saying the company’s guidance looks conservative relative to improving underlying trends.

“While guidance is intended to ‘reflect the current environment,’ we believe trends are meaningfully ahead of the current environment,” Kirk said in an April 10 note. He added that fourth-quarter results and March sales trends were “an all clear” for investors, distributors and retailers heading into the key summer selling season.

Constellation reported fourth-quarter beer shipments up 1.1% year over year and beer depletions up 0.6%, returning to positive growth after declines in the prior three quarters. Beer net sales were $1.73-billion, ahead of the $1.72-billion consensus estimate, while total net sales reached $1.92-billion versus consensus of $1.87-billion. Adjusted EPS came in at $1.90, well above the $1.71 expected by the Street.

For fiscal 2027, the company guided to beer net sales growth of negative one per cent to positive one per cent, beer operating margin of 37% to 38% and adjusted EPS of $11.20 to $11.90, below the $12.38 consensus estimate. Constellation also withdrew its fiscal 2028 outlook. Kirk said the guidance assumes beer performs in line with wine and spirits, which he suggested would be unusually conservative based on the company’s history. He also noted the outlook does not explicitly include any benefit from the World Cup.

Several near-term factors could support better-than-guided performance according to Kirk, including easier comparisons, improving March trends, tax refunds, an end to disruption tied to California wildfires and Hispanic consumer spending patterns, and the potential lift from the World Cup.

“With the World Cup, tax refunds, a ban on intoxicating hemp, lapping California wildfire impacts, and lapping disruptions to Hispanic consumer habits, Constellation Brands Beer depletion should improve and justify re-rating,” he said. “In the interim, despite tariff headwinds, profitability has been stronger than expected.”

Kirk trimmed some of his fiscal 2027 estimates but remains above the company’s earnings range. He now expects Constellation to generate adjusted EBITDA of $3.61-billion on revenue of $9.29-billion in fiscal 2027, up from adjusted EBITDA of $3.36-billion on revenue of $9.14-billion in fiscal 2026.

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