Citi trims target price on Diageo
By Abigail Townsend
Date: Tuesday 06 Jun 2023
(Sharecast News) - Citi has cut its price target for drinks giant Diageo on weaker US trading.
In a note published on Tuesday, the bank said Diageo's "more downbeat outlook" for its US spirits business had prompted it to trim its forecasts for American organic sales growth for both the second half and the 2024 full-year.
It continued: "Citi's full-year 2024 earnings per share [forecast] is now 3% below consensus.
"Although we expect weaker US trading trends to also impact others, the quantum will be less. Post these changes, Diageo is trading on a discount to Pernod Ricard. Although this is below long-term averages, it is tough to see catalysts for a re-rating ahead of the August 2023 full-year results."
It has therefore cut its target price for the blue chip to 3,600p, from 3,800p, and reiterated its preference for European rivals Campari Group and Remy Cointreau.
As at 1345 BST, shares in Diageo were ahead 1% at 3,360p.
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