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On Monday, Piper Sandler adjusted its stance on Constellation Brands (NYSE:STZ), shifting the rating from Overweight to Neutral and reducing the price target to $200 from the previous $245. The decision comes in the wake of new tariffs imposed by President Trump on Mexican imports, which took effect on February 1, 2025. These tariffs include a significant 25% levy, and while their duration remains uncertain, Piper Sandler’s analysis assumes they will last at least one quarter for the purposes of financial modeling. The stock, currently trading at $180.80, has fallen significantly over the past six months, with a -26.16% return. According to InvestingPro, 17 analysts have recently revised their earnings estimates downward for the upcoming period.
The firm’s analyst cited the impact of the tariffs on Constellation Brands’ first-quarter margins for fiscal year 2026. Although the exact effect of a full year of tariffs is challenging to predict, Piper Sandler acknowledges the potential for a $3.00 to $3.75 reduction in the fiscal year 2026 estimated earnings per share (EPS) if the tariffs persist. The uncertainty surrounding pricing and volume headwinds contributes to the difficulty in making accurate estimates. The company currently maintains a healthy gross profit margin of 51.53%, though InvestingPro’s comprehensive analysis indicates the stock is trading at a high earnings multiple relative to peers.
In addition to tariff-related concerns, Piper Sandler noted weaker top-line retail momentum as a factor in the downgrade. As a result, the firm has revised its EPS forecasts downward, from $15.01 to $13.75 for fiscal year 2026, and from $16.63 to $15.50 for fiscal year 2027. The valuation multiple applied to Constellation Brands’ projected earnings has also been lowered to approximately 13.0 times the estimated 2026 EPS, a decrease from the prior multiple of around 15.0 times.
This reassessment of Constellation Brands’ financial outlook reflects the anticipated challenges the company may face due to the new tariff environment and retail trends. Piper Sandler’s revised price target of $200 represents a cautious approach to the stock’s valuation in light of these factors.
In other recent news, Constellation Brands has been the subject of numerous analyst revisions following its recent earnings report. Despite setbacks in the beer segment, Bernstein SocGen Group maintained an Outperform rating for the company, which reported a 3.2% growth in Q3 depletions and beer net sales of $2,032 million. RBC Capital Markets and Truist Securities, however, reduced their price targets for Constellation Brands to $293 and $190 respectively, both maintaining their ratings despite a challenging quarter.
Piper Sandler also expressed a positive outlook on Constellation Brands, maintaining an Overweight rating and a price target of $245.00. The firm’s analysis highlighted the potential impact of tariffs on the alcohol sector, and the possible long-term market share gains for Constellation Brands due to its planned expansions of Modelo and Pacifico.
TD Cowen held a Hold rating on the company’s stock following third-quarter results that fell short of expectations. Despite these developments, Constellation Brands remains a prominent player in the beverage industry with potential for continued growth in the domestic beer market. These are the most recent developments for Constellation Brands.
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