Jefferies upgrades Diageo to 'buy'
By Michele Maatouk
Date: Thursday 05 Dec 2024
(Sharecast News) - Jefferies upgraded Diageo to 'buy' from 'hold' on Thursday and lifted the price target to 2,800p from 2,300p.
"Companies do not change overnight; however, we think that Diageo will start to look different as confidence in spirits growth increases and under a new, heavyweight CFO, where we see a renewed focus on growth, profit and cash," it said.
Jefferies said FY25 should be a trough year with recovery from FY26 onwards.
The drinks company is due to report H1 2025 results on 4 February. Jefferies said its FY25 earnings per share estimate is mid single digit below the street largely given adverse FX and lower associate income.
"We think the company could provide a new guidance framework of 3-6% organic sales and 4-8% organic EBIT growth, with an emphasis on stronger returns, effective from F27," it said.
"This provides a cushion to absorb potential volatility around possible tariffs under Trump 2.0 and to build in F26 as a recovery year to rebuild credibility before hitting full stride."
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