Diageo: share falls with analyst pessimistic

(CercleFinance.com) - Diageo shares lost ground on Friday, hit by unfavourable comments from analysts at Deutsche Bank, who lowered their estimates for the British spirits group.


In a study published this morning, the broker explained that it had reduced its earnings forecasts for the alcoholic drinks giant due to weak business in Europe and the US.

Deutsche Bank - which is maintaining its 'sell' recommendation on the stock - is therefore reducing its target price for it from 2,400 pence to 2,300 pence.

The analysts justify their decision by the recent performances recorded by its closest comparables and by the latest data relating to the sector.

Our forecasts now reflect a more cautious view of the US and Europe, and we now expect a significant deterioration in organic sales growth in North America in the second half of the year, they said.

Deutsche points out that this assumption is at odds with the full-year guidance provided by Diageo.

Given the current adverse factors and limited visibility, we believe it would be more prudent to abandon the medium-term organic growth target of between 5% and 7% as soon as possible, it concluded.

Following these comments, Diageo shares lost 0.7% on the London Stock Exchange on Friday, bringing their decline over the last three months to over 6%.


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