UBS has raised its rating on Diageo to 'buy' from 'neutral'. The broker said it believed the company's targets are too cautious.

The beverage giant currently has a guidance of 4% organic growth for 2006 with a 7% rise in EBIT. UBS believes that given the strong momentum predicted in the US and thanks to positive developments in Nigeria, South Korea and Taiwan, these estimates are cautious.

UBS now has a 2006 EBIT growth forecast of 8% for the company.

UBS lifted Diageo's price target to 960 pence from 860 pence.