Diageo analyst raises a glass to the Guinness maker in wake of results
Published: 10:30 06 Aug 2025 EDT
UBS has reiterated its ‘buy’ rating on Diageo PLC (LSE:DGE), setting a 12-month price target of 2,450p, implying nearly 29% upside from current levels.
It highlights improving earnings visibility for the drinks group, thanks to a renewed push on productivity, with around half of these savings being reinvested and the rest dropping straight to the bottom line.
According to the Swiss bank, this should help draw a line under more than two years of earnings downgrades.
The note acknowledges ongoing challenges in the global spirits industry but suggests Diageo is building momentum with a sharper focus on commercial execution, a strategy the interim chief executive previously used to good effect at Coca-Cola Europacific Partners.
Looking ahead, the company’s guidance for 2026 points to a step-up in second-half organic revenue growth to around 4%, which UBS says will come not from a change in the consumer environment.
Rather, it is likely to emerge from incremental Guinness capacity in the US and Europe, stabilising trends in key European spirits markets, and an easier comparison in China and Asia.
UBS expects organic earnings before interest and tax (EBIT) margin to rise by 110 basis points in 2026, supporting 5.6% organic EBIT growth, with further deleveraging likely as free cash flow strengthens.
Diageo is currently trading at a discount to European staples, and UBS sees greater potential for a re-rating if US spirits growth recovers and commercial execution continues to deliver.
