Constellation Brands Inc (NYSE:STZ), the US beer and beverage company, faces ongoing pressure on its top line as prolonged concerns among Hispanic consumers weigh on demand, according to Jefferies analysts, who downgraded the stock to “Hold” on Wednesday.
“While valuation is quite low, today’s fundamentals lack support for an inflection,” Jefferies wrote, highlighting that behavioral shifts among Hispanic consumers are likely to continue affecting sales.
The analysts pointed to survey data indicating that Hispanic immigrants are disproportionately impacted by recent US immigration policies. The number of respondents who know someone who has been arrested, detained, or deported since January 2025 has nearly tripled since April, reaching 36% among Hispanic respondents.
The study also found 41% of Hispanic participants are avoiding away-from-home activities, compared with 30% of the broader sample.
This trend is hitting Constellation’s beer portfolio particularly hard. More than 40% of the company’s beer business is tied to Hispanic consumers, who are reportedly reducing spending due to both policy concerns and economic pressures. Jefferies said these factors will likely weigh on Constellation’s performance in fiscal 2026 and 2027, with organic sales projected to decline 5.9% in F26 and grow only 1.4% in F27.
While the company is taking steps to improve cash flow, such as a potential reduction in capital expenditures and increased share buybacks, the brokerage said volume growth is needed before Constellation can justify a higher valuation multiple. Jefferies currently models a flat volume trajectory and expects EPS of $11.46 in F26, below consensus estimates.
The analysts also noted uncertainty around the growth potential of Constellation’s Modelo brand, previously a key driver of US beer growth. “It’s unclear if Modelo’s distribution growth runway remains vast or has nearly run its course,” analysts noted.
The brokerage set a price target of $154, implying modest upside from Tuesday’s close of $143.47, based on 10.5 times projected F28 EBITDA of approximately $3.6 billion.