UBS downgrades Diageo to Sell on risk to premium valuation

UBS downgraded Diageo to Sell from Neutral with a price target of 2,650 GBp, down from 3,650 GBp. The stock’s premium valuation is at risk in the near-term, the analyst tells investors in a research note. The firm sees risk of a de-rating until Diageo’s U.S. spirits growth accelerates to mid-single digits and management “can draw a line” under Latin America destocking. UBS lacks conviction that these inflections will come in the first half of 2024.