DEO Stock Recent News

Investors interested in Beverages - Alcohol stocks are likely familiar with Heineken NV (HEINY) and Diageo (DEO). But which of these two companies is the best option for those looking for undervalued stocks?

Diageo PLC (LSE:DGE), the spirits company, has been downgraded from a ‘buy' to ‘neutral' by analysts at the Bank of America. The US bank expects the beverage sector to face a tough 2024 due to suppressed consumer spend on both sides of the Atlantic, foreign exchange headwinds and the risk of tariffs on Cognac in China.

Diageo's share price has dropped during the last two years, making it cheaper than some of its most important peers. At the same time, the company is still steadily growing its revenue, earnings and dividend. Although there are risks and some problems with the market in Latin America and the Caribbean, these seem manageable.

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Diageo PLC (LSE:DGE) is looking for buyers for its beer brands, apart from Guinness, after falling to a three-year low on the back of a profit warning last month. The lower profits from beer are diluting the margins from the FTSE 100-listed giant's pirits business, a report from Axios said.

UBS has reignited its coverage of Diageo PLC (LSE:DGE), the marker of Smirnoff Vodka and Baileys, with a 'sell' recommendation, painting a picture of uncertainty and potential challenges for shares in a company that has long been a staple in the portfolios of many investors. Valuation is at the heart of the move from 'neutral' with the stock trading at around a 12% premium to other companies in the staples sector.

Diageo is still getting downgrades following its warning last month with both RBC and Deutsche Bank suggesting there is more disappointment to come from the beer and spirits group. With its 5-7% revenue growth guidance under threat, the 5-7% profit growth goal is likewise too high says RBC, adding that's before even considering the prospect of additional excessive inventory in the supply chain.

Spirits group Diago might have more bad news to come for investors, according to two top City brokers. Shares in the Johnnie Walker, Guinness and Smirnoff group tanked 15% on Friday as it warned of slowing growth in Latin America/Caribbean, a region that accounts for around 11% of sales.