HSBC cuts valuations for Diageo plc (NYSE:DEO) after accounting for weaker-than-expected results from North America, but maintained a Buy rating. In the first half of the fiscal year, sales in North America rose 3% with volumes down 4%.
Diageo ( DEO ) was seen to show dynamic results in other regions outside of North America, with overall organic growth of 13%.
Looking ahead, analyst Neil Churchill believes strong U.S. sales data in the coming months may ease market concerns of a deeper slowdown for Diageo ( DEO ).
“We expect H2 growth to remain resilient, including in the US, and this should boost investor confidence in the group’s ability to deliver high single digits.” pace
HSBC maintained a Buy rating on DEO, with a reduced price target of 4,500 pence. The company had a slightly higher cost of capital reflecting the group’s increased cost of debt.
The consensus sell rating for DEO is Buy, while the Seeking Alpha Quant Rating is Hold.