Wells Fargo Securities released their expectations for Constellation Brands’ shares (ticker STZ) and are reiterating “our Outperform rating and $189-$191 share price range,” according to their earnings preview.
Constellation shares have underperformed relative to the S&P 500, which is up 15.34 percent over the last 52-week period. Constellation shares are up 6.80 percent. Wells Fargo’s Bonnie Herzog, managing director, equity research for Beverage, Household & Personal Care, Tobacco & Convenience Stores, maintains that the “market continues to misprice the impact from tax policy changes.”
“While undoubtedly an import or border adjustment tax would negatively impact STZ’s earnings, we continue to believe the downside to earnings is being overestimated by the market,” she writes.
She cites the benefits from other potential tax policy changes such as: lower corporate tax rates; Constellation’s option to pass along some of the tax increases to consumers and shift some costs back to the United States; as well as the gradual phasing-in of any tax changes making near-term earnings risk minimal.
For the fourth quarter, her team projects 7 percent volume growth and 8 percent growth in depletions for Constellations’ beers. For wines and spirits, they expect the company to report 5 percent organic revenue growth, and a 27 percent operating margin, driven by recent acquisition and divestitures and the premiumization of its portfolio.
Burgundy-Only Auction Brings In $5.6 Million, Above Estimates
Chicago’s Hart Davis Hart auction house posted $5.6 million in sales in an auction that featured only wines from Burgundy. Some 99 percent of the lots sold topped their pre-sale estimates. HDH originally estimated the auction would bring in sales between $3.3 million and $4.9 million.
HDH’s A Celebration of Burgundy auction presented bidders with opportunities to purchase wines from more than 160 Burgundian domains including selections of Domaine de la Romanée-Conti, Jayer, Coche-Dury and Rousseau.
The two top-lots by price were 12 bottles of 1990 La Tâche, Domaine de la Romanée Conti and 12 bottles of 1989 Montrachet, Domaine de la Romanée-Conti. Each went for $77,675 including the buyer’s 19.5 percent premium.