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
For further details see:
Diageo is tagged as a short-term sell idea at Deutsche Bank