Diageo Upgraded by Analysts Despite Currency Concerns

Morningstar equity analysts are raising their fair value estimate for the drinks giant but the higher pound will hit growth

Philip Gorham 25 January, 2018 | 2:53PM
Facebook Twitter LinkedIn

Smirnoff vodka

Global drinks company Diageo (DGE) delivered a strong first half to its financial year. Morningstar equity analysts are nudging up their fair value estimate for the shares to £25 from £24 on higher profit margin assumptions, despite unfavourable currency movements. We still regard the shares, which rose today to above £25.54, as fairly valued.

Sales, which rose by 1.7% to £6.5 billion in the six months to the end of 2017, were in line with our forecasts. After a stodgy few years, organic growth has rebounded to what we view as normalised levels due to improved demand and better product ranges. Our forecasts had underestimated the impact of the recent strength of the British pound, however, which trimmed growth, and we are lowering our growth forecasts for the next 12 months as a result.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Diageo PLC3,620.50 GBX-0.52Rating

About Author

Philip Gorham