Deutsche Bank issued a Catalyst Call Sell Idea on Diageo ( NYSE: DEO ).
The firm sees downside risk from slower U.S. spirits growth, which is said to be already visible in market data. The read-through is that consensus marks on DEO may be too high.
Analyst Mitch Collett: "Diageo is the only Beverages company we cover that trades broadly in-line with its 5yr average P/E on consensus estimates. On our estimates, Diageo trades on a CY23 P/E of 22.9x, an 11% premium to European Staples and a 94% premium to the broader market."
Collett and team think Diageo ( DEO ) needs consensus upgrades to continue to outperform and increasingly see downgrades as more likely. While Diageo ( DEO ) is still seen as fundamentally one of the best positioned companies in European Staples, investors are advised to look for a better entry point in the not too distant future.
Deutsche Bank lowered its rating on DEO to Sell from Neutral and cut its price target to 3,230 pence from 4,050 pence.
Shares of DEO fell 1.89% premarket in the U.S. to $171.89 vs. the 52-week trading range of $166.25 to $223.14.
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Diageo is a catalyst call sell idea at Deutsche Bank