Diageo upgraded on recovery potential offering offer 20% upside for shares, says Deutsche
Published: 07:31 31 Mar 2026 EDT
Diageo PLC (LSE:DGE) has been upgraded to ‘buy’ by Deutsche Bank, which said a reset in expectations leaves scope for recovery despite near-term pressure on earnings.
The bank cut its price target to 1,650p from 1,790p but said this still implies around 20% upside from current levels. Shares closed at 1,419p.
Analyst Mitch Collett said forecasts now assume weaker delivery in 2026 and a “reset to profitability in 2027”, leaving estimates below consensus in the medium term.
However, he argued much of the downgrade is already reflected in the valuation, with the stock trading at a discount to both European consumer staples peers and its own long-term average.
Deutsche expects Diageo to reduce margins to rebuild competitiveness, particularly in North America and Europe, where market share has come under pressure. This includes an assumed 600 basis point and 200 basis point decline in regional margins respectively.
The strategy would allow greater investment in pricing, marketing and innovation.
Over the longer term, Deutsche forecasts organic sales growth of around 3-4% and operating profit growth of 5-7%, as Diageo returns to more consistent and predictable performance.
