UPDATE 1-Constellation Brands raises FY09 cash flow view

(Adds details from press release, estimates, analyst quote, share price)

LOS ANGELES, Dec 2 (Reuters) - Constellation Brands (STZ.N) on Tuesday said it closed out foreign currency hedges, leading to higher cash flow and lower net earnings for 2009, but it left its adjusted profit target unchanged, which one analyst called a "notable positive" sign about trends for the company.

Constellation, the world's largest wine company, raised its fiscal 2009 net cash flow forecast by $50 million as it closed out foreign currency hedges. Closing the hedges, insurance against a weak dollar, led it to lower its 2009 earnings per share forecast because of anticipated taxes on the cash flow gain.

Stifel Nicolaus analyst Mark Swartzberg focused on the unchanged adjusted earnings target in a note to clients.

"This has the effect of saying trends remain broadly on plan in an environment in which many companies are reducing their earnings expectations," Swartzberg said in the note.

Constellation said the rising strength of the dollar motivated it to cash out foreign exchange hedges. A weak dollar would make Constellation's international brands more expensive to U.S. consumers.

Following the settlement of the hedge funds transactions, the company expects to add $50 million in after-tax cash proceeds to its current year net cash flow, which will be used to pay down its debt.

The expected gain boosted the wine company's fiscal 2009 free cash flow forecast to range between $360 million to $390 million, from a range of $310 million to $340 million.

Constellation expects to see a 20 cent per share impact on net, or reported, earnings, due to taxes on the additional cash flow gain. The company now forecasts fiscal 2009 earnings per share to range between 63 cents and 71 cents per share.

Adjusted earnings per share for 2009 are still seen between $1.68 and $1.76, compared with analysts' average estimate of $1.69, according to Reuters Estimates.

Shares of Constellation rose to $12.36 in after-hours trade, after closing up 3.14 percent at $12.17 on Tuesday on the New York Stock Exchange. (Reporting by Gina Keating in Los Angeles and Jennifer Martinez in San Francisco; Editing by Gary Hill)