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US: Constellation Brands' H1 "net positive" - analyst

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Constellation Brands' first-half results are "net positive" despite a drop in profits, according to an analyst. 

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The US-based wine, beer and spirits group reported earlier today (5 October) that H1 net profits fell by 17.1% to US$196.6m as a rise in SG&A expenses and support for new products took their toll. In Q2, net profits dropped by 23% to $124.6m, while sales inched up by 1.2% to $698.5m 

But, analysts at Stifel Nicolaus said the group's full-year free cash flow outlook - around $450m to $500m - and its outlook for the soon-to-be-acquired Crown Imports  meant the Q2 results were "net positive". 

Stifel said the biggest risk to its target price of $36 per share is US regulatory opposition to the Crown transaction. 

But the note added: "We do not consider this likely given the nature of the transaction and the low spread to offer on shares of Modelo." 


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