UK: Diageo rating cut to “neutral”

By | 3 July 2008

Global financial services firm UBS has downgraded its rating on Diageo to 'neutral' from 'buy', according to dealers.

Diageo's target price has also been cut from GBP13.00 (US$25.9) to GBP10.00 suggesting concern over the increase in unemployment and emerging market consumption in the US.

The broker revised its organic EBIT growth forecast to 7% from 9% in 2009-10.

UBS said it believes that Diageo' key growth levers remain intact and it had adjusted its EPS to reflect lower group organic EBIT growth, a higher interest rate of 6.25% from 2009 onwards, lower share buy back of GBP750m from 2009, and foreign exchange.

2008 EPS estimates have been upgraded by 0.9% and 2010 downgraded 2010 by 1.9%.

Sectors: Beer & cider, Soft drinks, Spirits, Water, Wine

Companies: Diageo

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