Barclays says Diageo's new forecasts underestimate its potential
By Alexander Bueso
Date: Thursday 18 Nov 2021
(Sharecast News) - Analysts at Barclays raised their estimates for Diageo's first half sales and profits, saying that they underestimated the company's potential.
In turn, they also raised their target price for the shares from 4,440.0pp to 4,700.0p, while keeping their recommendation for the stock at 'overweight'.
Earlier in the same week, the drinks giant had held its Capital Markets Day, where it upgraded its guidance for organic sales growth for fiscal years 2023-25 to a range of 6.0-9.0%.
And for the first half, the company said it was now anticipating organic sales growth of "at least" 16% and even faster growth in its earnings before interest and taxes.
"These are significant forecasts, but we believe they underestimate the potential here," Barclays said in reaction to the new forecasts.
The analysts' own estimates for the half called for OSG growth of 18.1% and an EBIT increase of 19.3%.
For the full-year meanwhile, they were at 15.6% and 19.1%, respectively.
They also upped their own estimates for Diageo's EBIT growth across fiscal years 2023-25 to a range of 9.0-11.0%, which was ahead of the company's guidance.
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