Truist Securities has upgraded Constellation Brands from Hold to Buy, raising its price target from $190 to $215. This move follows a fresh consumer study that challenged prevailing concerns over declining alcohol consumption, particularly in the 30–39 age group. The findings suggest that the market has been overly pessimistic, with sentiment reaching overly cautious levels.
Truist highlighted that Constellation’s free cash flow is not being fully valued by the market. With a strong 6% FCF yield and dividend growth of 14.61% over the past year, the company is positioned more attractively than recent sentiment implies.
In addition, Constellation recently announced a $500 million senior notes offering aimed at general corporate purposes, including debt reduction. The company has also refinanced its $2.25 billion credit facility, which improves financial flexibility and strengthens its capital structure. Moody’s followed up with an upgrade of the company’s senior unsecured ratings to Baa2, citing stable leverage and resilient margins.
Dividend Fundamentals
Constellation Brands currently pays an annual dividend of $4.08 per share, yielding approximately 2.18%. The company has a decade-long history of consistent dividend growth. The next dividend payment is scheduled for May 15, 2025, with an ex-dividend date of April 29. Its capital return framework also includes a new $4 billion share repurchase plan and a 30% dividend payout ratio target.
In short, Truist’s upgrade reflects a shift in both consumer behavior assumptions and a reassessment of Constellation’s undervalued financial strengths.