DEO - Diageo is viewed cautiously at Goldman Sachs amid weaker spirits pricing forecast

2023-06-15 07:42:14 ET

Goldman Sachs lowered its rating on Diageo ( NYSE: DEO ) to Neutral from Buy on Thursday over concerns the near-term upside potential is limited and sales growth could be lackluster

Analyst Oliver Nicolaï and team believe spirits demand is resilient into a potential downturn and the long-term structural equity story of Diageo remains attractive through strong brands, a leadership position in scotch, gin and tequila and an attractive geographic footprint. However, a forecast for a prolonged normalization in the U.S. spirits market and the lack of catalysts pushed Goldman Sachs to the sidelines on the spirits stock with the recent secular premiumization trend expected to be on hold

Nicolaï warned there is likely to be muted growth earnings upgrades for Diageo ( DEO ) amid what could be a period of worsening volume trends and a weaker pricing for U.S. spirits wholesalers over the next six months.

Goldman Sachs clipped its price target on Diageo ( DEO ) to $186.48 from $217.80.

Shares of Diageo slipped 0.18% in premarket trading on Thursday to $172.36.

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