Diageo Shares Slide as Deutsche Bank Downgrades Ahead of Results

Shares in Diageo (LSE: DGE) fell on Wednesday, July 29, after Deutsche Bank cut its rating on the drinks giant, warning that the stock’s recent rally leaves it facing greater downside than upside risk heading into next week’s results.

Diageo stock dropped 2.3% to 1,634p in early trading, making it one of the session’s weaker large-cap performers, after the German bank downgraded the shares to “hold” from “buy.”

Deutsche Bank analyst Mitch Collett noted that Diageo shares have surged 22% since the bank upgraded the stock at the end of March — outperforming the broader European food and beverage sector by 11 percentage points over that period. Despite the downgrade, Deutsche Bank kept its price target unchanged at 1,700p, implying roughly 4% further upside from current levels, and left its underlying forecasts largely intact.

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The move comes just over a week before Diageo, owner of Johnnie Walker whisky, Guinness stout and Smirnoff vodka, reports full-year results for fiscal 2026 on Thursday, August 6. Collett said he expects those numbers to come in broadly in line with consensus.

More significant, however, is an anticipated strategic update alongside the results. Chief executive Dave Lewis, who took the helm roughly eight months ago, is expected to unveil a “reset” plan aimed at sharpening Diageo’s competitiveness as it enters a new financial year.

Collett cautioned that the update carries a “broad range of potential outcomes,” and following the stock’s strong run-up, he sees the risk skewed to the downside. He also flagged that Wall Street’s expectations for fiscal 2027 and beyond look “materially too optimistic,” with Deutsche Bank’s own earnings-per-share estimate sitting roughly 10% below the Bloomberg consensus.

Diageo has faced a prolonged period of pressure on volumes and margins across its spirits portfolio, and investors will be watching closely next week for signs of how Lewis intends to reset growth expectations.