Story updated at 9:55 a.m. to reflect market activity.
Shares of Constellation Brands fell 1% to $81.70 in morning trading.
The bank raised its price target for the wine, beer, and spirits producer to $88 from $84 despite the downgrade. Analyst Judy Hong says the owner of the Svedka brand of vodka lacks any near-term catalysts.
"We are downgrading shares of Constellation Brands to Neutral from Buy, as our EPS estimate gap versus consensus has narrowed, valuation is full, and our price target now shows only 6% upside in 12-months," Hong wrote. "We are lowering our EPS by 2% in FY15/16 as we make beer packaging savings more back-end loaded."
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Separately, TheStreet Ratings team rates CONSTELLATION BRANDS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONSTELLATION BRANDS (STZ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, solid stock price performance and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- STZ's very impressive revenue growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues leaped by 88.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 84.48% and other important driving factors, this stock has surged by 87.44% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STZ should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Beverages industry and the overall market, CONSTELLATION BRANDS's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 92.7% when compared to the same quarter one year prior, rising from $109.50 million to $211.00 million.
- You can view the full analysis from the report here: STZ Ratings Report