Diageo half-year results: where next for the share price?

The British multinational alcoholic beverages company will unveil its interim results on Thursday, with analysts from Jefferies expecting to see a ‘more normalised outlook for growth’ in 2020.

Diageo will unveil its half-year results on Thursday, though analysts from Jefferies have downgraded the stock ahead of its latest set of earnings.

The US-based investment bank opted to lower its rating from ‘buy’ to ‘hold’ last week after ‘three very strong years of change’ for the group, with its analysts expecting a ‘more normalised outlook for growth’.

‘[Diageo] remains a well-run, diversified company that operates in a favourable industry, however, we move to 'hold' given less conviction on the upside to street expectations with the shares now fairly valued,’ Jefferies said in a note.

Analysts at Jefferies still believe the stock will rise, issuing a target price of £36 a share, which implies a potential upside of 12.5% based on Diageo trading at £31.99 as of 12:35 (GMT) on Monday.

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Investors eager to learn impact of US tariffs on Scotch whisky

Scotch whisky exports to the US had a 25% tariff imposed on single malt on October 2019, with investors eager to see what impact it will have on Diageo’s half-year results.

The drinks maker exports Scotch whisky globally, with investors hoping that its blended brands like Jonnie Walker and Buchanan’s, which are exempt from the new tariffs, will help the company weather the storm.

However, analysts remain upbeat, forecasting 4.2% organic net sales growth and organic operating profit growth of 4% for the six months to December.

Credit Suisse and Bernstein remain optimistic about Diageo

Analysts from Credit Suisse and Bernstein remain optimistic about Diageo, with the pair reiterating their respective ‘outperform’ and ‘market perform’ ratings for the stock in January.

Credit Suisse and Bernstein both upgraded their price targets for the stock to £36.30 and £34 a share respectively, implying a potential upside of 13.5% and 6.3%.

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