Morgan Stanley has upgraded the shares in global drinks giant, Diageo, from 'equal-weight' to 'overweight.'

The investment house said that it expects Diageo to be able to improve top-line growth, margins and EPS if management can invest more flexibly in growth opportunities, demonstrate that cost savings can outweigh restructuring costs and use the balance sheet capacity more effectively.

It added that it believes Diageo gets little credit for its superior return on capital employed.