Piper Sandler downgrades Constellation Brands on tariff risks

Investing.com -- Piper Sandler downgraded Constellation Brands Inc (NYSE: STZ) to "Neutral" from "Overweight" given uncertainty over newly imposed U.S. tariffs on Mexican imports and weakening retail sales momentum.

The brokerage slashed its price target to $200 from $245, and also lowered fiscal earnings per share estimates. Piper Sandler reduced its valuation multiple to 13 times estimated fiscal 2026 earnings, down from 15 times.

Former U.S. President Donald Trump implemented a 25% tariff on all Mexican imports starting Feb. 1. While the duration remains uncertain, Piper Sandler assumes it will last at least one quarter, impacting Constellation’s first-quarter fiscal 2026 margins. A full-year tariff could cut fiscal 2026 EPS by $3.00 to $3.75, the analysts warned.

“STZ could offset some incremental costs through more aggressive productivity savings. Pricing may also provide an offset, but taking pricing is challenging and difficult to assess given that key competitors produce in the US where no tariff cost applies,” analyst said.

The firm also noted Constellation's weakening sales trends, with U.S. beer retail sales down 1.8% in fiscal fourth-quarter 2025 and wine and spirits sales plunging 9.5%. The company may delay price hikes amid competitive pressures from U.S.-based rivals that are not affected by tariffs.

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