Diageo Needs U.S. Market to be Less of a Drag

Dow Jones
09/21

1054 GMT - Diageo isn't betting everything on a rapid recovery in spirits consumption in the U.S., but the market nonetheless remains key to the group's plans ahead, Jefferies analysts write in a note. The maker of Smirnoff vodka, Captain Morgan rum and Don Julio tequila said at an investor day last month that it expects America's drinks market to remain soft in the short term. That shows that the company's rebound plans are "not contingent on a roaring recovery in the U.S.," Jefferies says. "However, the U.S. business needs to move from being a drag to being broadly neutral," the analysts say, pointing to the group's efforts to shore up its key brands. Jefferies has a buy rating and a 1,626-pence target on the stock. Shares trade a little lower Monday at 1,603.5 pence.

 

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