DEO - Diageo is tagged as a short-term sell idea at Deutsche Bank

2023-05-15 10:01:13 ET

Deutsche Bank issued a Catalyst Call Sell Idea on Diageo ( NYSE: DEO ) on Monday.

Analyst Mitch Collett said the basis for the short-term investment idea is that while the firm continues to see Diageo ( DEO ) as a high quality company in an attractive sector, consensus estimates are believed to look too optimistic.

In terms of valuation, Collett warned that U.S. headwinds for Diageo ( DEO ) are reflected in the current share price with Diageo trading on a 12-month price-to-equity ratio of 20.7X to mark a 4% premium to the European Beverages sector and a 58% premium to the overall European market.

"Our EPS estimates are 4% / 8 % / 12% below consensus for FY22 / FY23 / FY24 respectively primarily due to more conservative expectations for the US based on a combination of industry data, tough comparators and the growing risk of inventory overhang."

Shares of Diageo ( DEO ) are swapping hands on the upper half of the 52-week trading range, despite the earnings headwinds in Europe and U.S.

More on Diageo:

• Diageo: A Consumer Staple Winner For FCF
• More articles from Seeking Alpha analysts
• Growth metrics on Diageo
• Relative strength index and moving averages
• Seeking Alpha's Quant Rating for Diageo

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