{"id":113635,"date":"2026-08-10T12:53:13","date_gmt":"2026-08-10T12:53:13","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/113635\/"},"modified":"2026-08-10T12:53:13","modified_gmt":"2026-08-10T12:53:13","slug":"brokers-split-on-diageo-as-jefferies-lifts-target-to-2200p-and-ubs-stays-on-the-sidelines","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/113635\/","title":{"rendered":"Brokers split on Diageo as Jefferies lifts target to 2,200p and UBS stays on the sidelines"},"content":{"rendered":"

\"Brokers<\/a> Brokers split on Diageo as Jefferies lifts target to 2,200p and UBS stays on the sidelines Proactive uses images sourced from Shutterstock <\/p>\n

Diageo PLC (LSE:DGE)<\/a>\u00a0has emerged from its capital markets day with two sharply different verdicts from the City. <\/p>\n

Jefferies has raised its price target to 2,200p from 2,000p, implying 23% upside, arguing that Sir Dave Lewis has delivered a credible plan a good deal faster than expected. <\/p>\n

UBS has kept its ‘neutral’ rating and a 1,600p target, below the level at which the shares are trading after a 5% jump on the day. <\/p>\n

The drinks group set out $1 billion of gross cost savings across the three years to June 2029, split between $850 million from a redesigned operating framework and $150 million from the supply chain. <\/p>\n

Overheads fall to about 10.5% of net sales from well above 14%, funded by $1.2 billion of restructuring costs spread over two years. <\/p>\n

The bull case <\/p>\n

Edward Mundy at Jefferies has lifted his 2027 earnings forecast by 15% and his 2028 figure by 10%, and now expects organic sales up 0.5% next financial year against a previous forecast of a 0.5% decline.w <\/p>\n

The bank’s argument is that the savings underpin mid-single-digit profit growth without resetting the earnings base, while deleveraging pulled forward to 2028 reopens the door to buybacks of at least $1 billion. <\/p>\n

On its numbers the stock trades on roughly 14.9 times earnings, a 19% discount to consumer staples peers against a 20-year average discount of 2%. <\/p>\n

Sceptical view <\/p>\n

Sanjeet Aujla at UBS accepts the main positive, that Diageo has de-risked American expectations without the profit reset bears had feared. <\/p>\n

His reservation concerns what happens when the savings run out. <\/p>\n

For the shares to re-rate towards a staples multiple of about 17 times, the bank believes Diageo must exit the plan growing faster than the roughly 3% organic sales rate embedded in guidance. <\/p>\n

That requires North America to move from flat to low-single-digit growth, or the rest of the world to beat its 5% target, with European spirits returning to growth alongside Guinness. <\/p>\n

UBS also notes that the $8 billion cash flow guidance implies an exit rate of $3 billion to $3.5 billion, a levered free cash flow yield of 5.5% to 6% that it considers less compelling than the brewers. <\/p>\n

In afternoon trading, the shares were up 1% at\u00a01,807p. <\/p>\n","protected":false},"excerpt":{"rendered":"Brokers split on Diageo as Jefferies lifts target to 2,200p and UBS stays on the sidelines Proactive uses…\n","protected":false},"author":2,"featured_media":113636,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[129],"tags":[1552,1550,14081,13905,5255,223],"class_list":["post-113635","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ubs","tag-capital-markets","tag-cost-savings","tag-diageo","tag-jefferies","tag-target","tag-ubs"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/117071315289158001","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/113635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=113635"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/113635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/113636"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=113635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=113635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=113635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}