Analyst raises target for Constellation shares

UBS analyst Kaumil Gajrawala on Tuesday raised his 12-month target share price to $21 from $18 on Constellation Brands Inc., which sells Mondavi wine, Svedka vodka and Corona beer, saying the company's forecast early this month was conservative.

Alcoholic beverage sellers have taken a hit during the recession as consumers trade down and cut spending. In turn, Gajrawala said he expects companies like Constellation Brands that sell discretionary products to outperform the market as the economy recovers because shoppers will buy more such products the more optimistic they feel about the economy.

Constellation's shares are the "cheapest" in their sector "despite rising over 15 percent this month," he told clients in a note Tuesday.

The company, based in Victor, N.Y., could benefit soon from rising sales in its Crown portfolio during the summer, rising wine sales to restaurants in the near-term and among other factors.

In early April, Constellation forecast that it would earn between $1.53 per share and $1.68 per share for its current fiscal year, which began March 1.

Analysts polled by Thomson Reuters on average are forecasting $1.68 per share.

Gajrawala expects Constellation to report annual profit of $1.75 per share.

The shares were trading Tuesday afternoon at $18.27, down 14 cents, or less than 1 percent.