Oddo BHF has confirmed its 'Outperform' rating on Diageo shares with an unchanged target price of 2700 pence.

The analyst reports that the short-term outlook remains challenging, with Q4 24/25 revenue expected to fall 6.6% as reported and 3.2% on an organic basis, 2.8% below the consensus.

Oddo BHF also reports that it has trimmed its organic growth forecast for FY 25/26 to +2.2%, due to a less favourable outlook in Europe and the US, although emerging markets continue to support the business.

However, according to the note, Diageo's recently launched cost-saving plan should improve its EBIT margin as early as next fiscal year.

Finally, the broker believes that despite the stock's YTD underperformance (-24% vs. -8% for the sector), the current valuation appears attractive, while its diversification is a plus in a context of low visibility.


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