By Emily Dattilo

Tariffs imposed by President Donald Trump on the biggest U.S. trading partners are nothing to clink glasses over for Constellation Brands, according to analysts at Piper Sandler.

Analysts Michael Lavery and Luke Maloney downgraded shares of alcoholic-beverage maker to Neutral from Overweight, slashed their target on the price to $200 from $245, and lowered earnings-per-share estimates.

Constellation stock fell 6.3% to $169.50 in premarket trading Monday.

The downgrade stems from Trump following through on his pledge to impose 25% tariffs on all Mexican imports, which went into effect on Feb. 1, Piper Sandler wrote.

That matters because Mexican beers account for about 86% of Constellation's sales, according to Roth MKM analyst Bill Kirk.

"The duration of these tariffs is not yet clear, but for modeling purposes, we assume for now that they last for at least about one quarter," Piper Sandler wrote. "We update our model to include a F1Q26 margin hit accordingly. However, if these tariffs lasted a full fiscal year, we recognize a potential $3.00-3.75 hit to F26E EPS, though potential pricing and volume headwinds make it difficult to estimate."

Constellation shares have fallen about 27% over the last year, and the latest quarterly report didn't help matters -- Constellation reported earnings and sales below estimates and cut guidance.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 03, 2025 09:21 ET (14:21 GMT)

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