Robert Moskow, an analyst from TD Cowen, maintained the Hold rating on Diageo. The associated price target was lowered to p2,275.00.
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Robert Moskow has given his Hold rating due to a combination of factors influencing Diageo’s current market position. The company’s recent sales growth and earnings per share slightly surpassed expectations, yet the overall demand for spirits remains weak. Interim CEO Nik Jhangiani has shifted the company’s focus towards improving margins and cash flow, aiming for stronger returns on investments through the Accelerate Program. This strategic shift is anticipated to lead to a mid-single-digit percentage increase in operating profit by fiscal year 2026, despite the current slow sales growth.
Moreover, the Accelerate Program is expected to generate significant cost savings, with management raising their target from $500 million to $625 million over three years. These savings are intended to enhance the company’s agility and efficiency, with half reinvested to support growth initiatives such as digitalization and AI utilization. However, the uncertainty surrounding the timeline for recovery in the U.S. spirits market, compounded by weak consumer sentiment and inflationary pressures, adds a layer of caution to the outlook. Given these mixed signals, Moskow’s Hold rating reflects a balanced view of Diageo’s potential for profit growth against the backdrop of ongoing market challenges.
In another report released today, Deutsche Bank also maintained a Hold rating on the stock with a £20.60 price target.
Based on the recent corporate insider activity of 150 insiders, corporate insider sentiment is neutral on the stock.