Proactive Investors
08 Jun 2026, 11:43 UTC · 2h ago
Diageo recovery hinges on affordability push, Jefferies argues
Proactive Investors
08 Jun 2026, 11:43 UTC · 2h ago
Story key points
5 claims · impact-rated
Jefferies has reiterated a 'buy' rating and raised its target price for Diageo PLC to £20 from £19. — Direct positive analyst recommendation and price target increase typically drive short-term buying interest.
+0.40Diageo shares are currently trading at a 28% discount to the wider consumer staples sector, compared to a historical average of 2%. — Significant historical undervaluation suggests a strong value play for investors if the company can execute its turnaround.
+0.30A strategy update is scheduled for 6 August, which is expected to provide clarity on Diageo's medium-term recovery plan. — Upcoming catalyst events create volatility and anticipation, potentially acting as a trigger for price movement.
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Jefferies analysts expect 2027 to be a transition year before organic sales and EBIT growth improve in 2028. — Indicates a prolonged recovery period, suggesting no immediate explosive growth in the very near term.
Diageo is facing a 'premiumisation hangover,' with tequila identified as the biggest challenge in its portfolio. — Highlights a specific structural weakness and consumer headwinds affecting a key growth segment.
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Model heads
Jefferies reiterated a 'buy' rating and raised the target price despite noting some portfolio weaknesses.
The company is progressing toward a maiden JORC resource with its largest Zambia drilling programme to date.
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