Using the Trending Stocks page for the UK market, we have shortlisted two companies from the FTSE 100 index, British American Tobacco (GB:BATS) and Diageo (GB:DGE) which have received recent analyst ratings.
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Among these stocks, BAT has been assigned an overall Moderate Buy rating by analysts, whereas Diageo has been given a Hold rating. BATS presents a potential upside of approximately 31%, while DGE offers an upside potential of 18%.
Let’s take a look at the details.
British American Tobacco PLC (BAT)
BAT is a prominent tobacco manufacturer in the UK with a collection of well-known brands such as Camel, Newport, Dunhill, Vuse, Velo, and others.
The analysts remain bullish on the company and the share price considering its strong grip on the new category segment, which exhibits significant potential for higher earnings. The company is expecting this segment to be profitable by 2024. Not to forget the promising dividends with a current yield of 8.47%, which makes it a top pick for income investors.
On the other hand, analysts also maintain a cautious approach due to the prevailing challenges in the tobacco industry, particularly the decline of the highly lucrative combustible segment globally.
Most recently, three days ago, Gaurav Jain from Barclays maintained his Buy rating on the stock, predicting a growth rate of 27.3% in the share price.
Five days ago, J.P. Morgan’s analyst Jared Dinges re-rated the stock as Hold at a more modest upside of just 8.4% in the share price.
Is British American Tobacco Stock a Good Buy?
According to TipRanks’ analyst consensus, BATS stock has a Moderate Buy rating. The stock has a total of six recommendations, of which three are Buy.
The average price forecast of 3366.6p represents a growth of 30% from the current levels.
YTD, the stock has been trading down by 21%.
Diageo PLC
Diageo is a leading beverage company that possesses an exceptional assortment of premium brands, including Johnnie Walker, Tanqueray, Smirnoff, and many more.
Over the past year, the shares have exhibited volatility, experiencing a decline of 7%. In the last six months, the stock has lost more than 10% of its value. Overall, analysts have mixed views on the stock. Some analysts believe that following its recent underperformance, the stock has significant potential for growth, leading to substantial gains for investors. On the other side, few analysts see high inflation and the cost of living crisis as major headwinds for the company.
Three days ago, analyst Mitch Collett from Deutsche Bank reiterated his Sell rating on the stock, anticipating a potential downside of 21.3% in the share price.
On the same day, Goldman Sachs analyst Olivier Nicolai confirmed his Buy rating on the stock, predicting growth of 33.5%.
Is Diageo a good stock to buy?
DGE stock has a Hold rating on TipRanks based on five Hold, five Buy, and two Sell recommendations.
With an average price target of 3,971.9p, analysts predict a growth of almost 18% in the share price.
Conclusion
Among these two UK-based companies, analysts are more bullish on BATS stock, considering its earnings growth and healthy dividends. While DGE stock has a more cautious approach from analysts with a Hold rating.
