Investing.com — TD Securities upgraded Diageo plc to “buy” from “hold” rating and raised its price target on the to 1,750 pence from 1,650 pence, and to $93 from $88 on the , citing valuation dislocation and confidence in a turnaround under new chief executive Dave Lewis.
“Valuation dislocation creates an attractive entry, with CEO-led cost cuts and reinvestment expected to restore growth and improve commercial execution,” the broker said.
The new price target applies a 14 times multiple to the firm’s forward 12-month earnings per share estimate, representing a 5.1-turn discount to Diageo’s five-year average forward price-to-earnings multiple of 19.1 times.
Diageo is trading near what TD Cowen described as multi-decade lows, as weakness in U.S. spirits has pressured results.
Lewis, who joined Jan. 1, previously led a multi-year turnaround at Tesco focused on cost discipline, SKU rationalization, and restoring competitiveness.
The broker maintained its fiscal 2026 organic sales growth estimate of negative 2.0%, in line with consensus and at the high end of Diageo’s own guidance range of negative 2% to negative 3%.
TD Cowen kept its fiscal 2026 EPS estimate at $1.62, against consensus of $1.61, and its fiscal 2027 organic sales growth estimate at positive 1.7%, against consensus of positive 1.5%.
Diageo reported fiscal 2025 net sales of $20.25 billion. The firm forecasts revenue declining to $19.74 billion in fiscal 2026 and $19.53 billion in fiscal 2027.
On U.S. competitiveness, the report’s central debate, TD Cowen noted Diageo has acknowledged “a lack of competitiveness in the U.S., as evidenced by persistent share losses.” The company’s NABCA market share fell from a peak of 18.8% to 17.7% over the trailing six months through April 2026, with 10 consecutive months of year-over-year share losses.
Diageo is undertaking a price architecture overhaul of its key tequila brands, Casamigos, Don Julio, and Astral, alongside a broader portfolio and route-to-market review under newly appointed North America head John O’Keeffe, a 30-plus-year company veteran.
A key upcoming catalyst is a strategy update on Aug. 6, alongside fiscal 2026 results, which TD Cowen described as Lewis’s first opportunity to outline his strategic vision.
The broker said it expects Diageo to establish a long-term growth algorithm targeting low-single-digit organic sales growth and mid-to-high-single-digit organic operating profit growth.