Diageo: shares higher after Morgan Stanley upgrade

(CercleFinance.com) - Diageo shares were up slightly on Friday after Morgan Stanley upgraded the stock, raising its corresponding target price, as it sees the consumption of beverages return to pre-Covid levels in mid-2021.


The broker upgraded the stock to "overweight" from "equal weight", saying that an analysis of recovery scenarios suggests the consensus for organic sales growth and EPS are too low.

Morgan Stanley analysts, who raised their target price for the share to 3,500 pence from 2,600 pence, said Diageo (along with France's Pernod Ricard) has the potential to benefit from large earnings upgrades if consumption patterns recover to the pre-Covid path.

"We believe the stock is not pricing-in this outlook," they said in a note to clients.

Diageo shares were up 0.1% in late-morning trading on the London Stock Exchange, while the FTSE 100 index was down 0.4%.

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