September 10, 2018 / 5:55 PM / 2 months ago

BUZZ-Constellation Brands: SunTrust sees a "Canopy" cloud, cuts rating

** Constellation Brands’ $4 bln investment in Canopy Growth will “keep a cloud over the stock for at least the next few quarters,” says SunTrust Robinson Humphrey

** Brokerage downgrades STZ to “hold” from “buy” and cuts PT to $220 from $260, valuing it at 21x FY20 EPS est., in-line with beverage peers

** STZ last up 0.2 pct at $212 on Monday; WEED was up 2.4 pct

** There is little certainty in terms of revenue or profit potential and the category is in its infant stages, says analyst William Chappell, also lowering FY19 and FY20 EPS estimates

** Chappell also concerned deal shifts investor focus away from STZ’s outperforming beer portfolio, cautioning stock could be range bound due to a higher post-deal debt and few near-term catalysts for the cannabis business

** Since the deal was announced on Aug. 15, STZ shares have dipped 4.3 pct, while WEED has soared 115.5 pct (Reporting by Savio D’Souza)

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