DEO - Diageo is tapped by HSBC to see improved results

HSBC cut estimates on Diageo plc ( NYSE: DEO ) after factoring in weaker-than-anticipated results from North America, but kept a Buy rating in place. For the first half of the fiscal year, North American sales were up 3% with volume down 4%.

Diageo ( DEO ) was noted to show dynamic results in other regions outside of North America, with overall organic growth of 13%.

Looking ahead, analyst Neil Churchill thinks think robust U.S. sell-out data in the coming months can assuage market concerns of a deeper slowdown for Diageo ( DEO ).

"We expect H2 growth will remain resilient, including the US, and this should enhance investor confidence in the ability of the group to compound at a high single digit." pace

HSBC maintined a Buy rating on DEO, with a reduced price target of 4,500 pence. The firm accounted for a slightly higher cost of capital reflecting the group’s increased cost of debt.

The consensus sell-side rate on DEO is Buy, while the Seeking Alpha Quant Rating is Hold.

For further details see: