Constellation Brands PT Lifted to $220 by Cowen

Cowen is raising its price target for Constellation Brands to $220 following quarterly results. 

Weakness in beer demand:  Constellation Brands delivered worse-than-expected beer sales, which dropped 4%. Led by sales in its Modelo Beer portfolio and Corona brand, Constellation noted that beer production in Mexico has returned to “normal" levels in June, following COVID-19 pandemic-related disruptions. Beer accounts for more than 75% of the company’s earnings before interest and taxes.

Cheers to wine and hard seltzer: Better-than-expected wine and spirit sales, combined with the rapid growth of the hard seltzer brand, helped to offset the drop in beer sales. Wine and spirits sales slipped 4% but beat expectations of $570.7 million. The company also announced that it acquired Empathy wines, a direct-to-consumer wine brand that was co-founded by media personality Gary Vaynerchuk. 

• Corona Hard Seltzer: Constellation’s new hard seltzer brand is catching on quickly with consumers. Cowen analyst Vivien Azer says the beverage is “running ahead of plan, with the brand now #4 in the segment.”