Diageo Shares: Deutsche Bank Turns Positive as Valuation Resets

Diageo (LON: DGE) shares drew attention after Deutsche Bank upgraded the stock to Buy from Hold in a note to clients on Tuesday, with the bank arguing that a reset in earnings expectations has already been reflected in the valuation.

Analysts at the bank set a 1,650p price target on the stock, down from 1,790p, but said the new level still implies roughly 20% upside as the drinks group focuses on pricing, marketing investment, and product innovation to support more stable growth.

Deutsche Bank argued that Diageo is now better positioned to deliver the “predictable profitable growth” investors look for, with much of the uncertainty already reflected in the share price.

The call follows several mixed views across the market in March.

Earlier this week, BNP Paribas lifted its rating to Neutral from Underperform, citing valuation support with a 1,450p target.

In contrast, HSBC downgraded Diageo to Hold at the start of March, pointing to uncertainty over when U.S. volumes will bottom.

The firm flagged a weaker U.S. spirits category, a softer consumer in China, and ongoing pressure in Chinese white spirits as reasons for the company’s recent guidance cut.

Diageo shares fell 1.6% on Tuesday and remain down 12.8% year to date, extending a 30.8% slide over the past 12 months.

Despite the decline, analyst sentiment remains broadly supportive. Data compiled by TradingView shows 15 Buy ratings, 10 Hold ratings and one Sell. The analyst consensus price target is 1,995.5p, suggesting a potential 42.9% upside from current levels.

Analysts believe the next catalysts include signs of stabilisation in the United States and evidence that marketing investments are helping to rebuild momentum.