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(Sharecast News) - Citi reiterated its 'buy' rating on Diageo on Monday as one of its core picks for 2025 as it said first-half results were on track to deliver.
"The weaker end to December trading in the US for the beer and spirit industry may limit Diageo's ability to beat H1 25E consensus expectations at the H1 print," it said.
"However, we believe in-line delivery should be sufficient to provide confidence that the earnings downgrade cycle has ended and that the earnings trajectory for Diageo (and the wider spirits industry) is trending toward stabilisation/positive territory."
Moreover, Citi said it expects the new chief financial officer to update Diageo's mid-term guidance framework and cut mid-term organic sales growth by 100 basis points to +4-6% as well as committing to operational leverage and improved free cash generation/conversion.
"Although we expect the shares may pause after the H1 print as the group faces tough comps in the US as it laps the launch of Crown Royal Blackberry, we reiterate our buy on Diageo as one of our core picks for 2025," the bank said.
At 1005 GMT, the shares were down 3% at 2,347p amid worries about the impact of US tariffs on imports from Mexico and Canada.
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