Shares of Constellation Brands (STZ), the distributor of imported Mexican beers in the U.S., fell sharply as investors digested the impact of President Donald Trump’s tariffs.
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STZ slumped by over 6% in pre-market trading on Monday, February 3rd, after the White House slapped 25% tariffs on all goods imported from Mexico.
The company, which imports and distributes Mexican lagers like Corona and Modelo Especial, is among those seen at risk from a prolonged trade war between the U.S. and its southern neighbour.
Mexico has said it will retaliate after the White House announced the tariffs over the weekend, though President Trump is expected to hold a call with Mexico’s leadership today to discuss the issue.
STZ Cut to Hold
In response, Piper Sandler adjusted its view on STZ, cutting from Overweight to Neutral (Hold) and reducing the price target to $200 from the previous $245.
While the duration of the tariffs remains unclear, the analyst firm assumes the levy of 25% will last at least one quarter.
If the tariffs were to last a full year, Piper Sandler has estimated a potential $3.00-3.75 hit to Fiscal 2026 earnings per share, although pricing and volume headwinds make it difficult to estimate.
Speaking to CNBC last October, STZ CEO Bill Newlands was relaxed about the threat of tariffs and pointed out that the company saw double-digit growth during the first Trump administration.
Although most famous for its Corona and Modelo beers, STZ also imports the Casa Noble and Mi Campo tequila brands.
Is STZ a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on STZ, based on 13 Buys and eight Holds. The average 12-month STZ price target of $244.05 implies 35% upside from current levels.
