UniCredit Bank Maintains BUY Rating on Diageo, Full Year Results Preview

August 19 00:00 2011

London, August 19 (TheAlphaReporter.com) – Analyst Graeme Eadie of UniCredit Bank maintains his “BUY” rating on Diageo DGE : LSE). The target price is set to GBP13.40.

Analyst Graeme Eadie of UniCredit Bank, in a research note published this morning, mentions that Diageo is not expected to report disappointing results for the full year ending June 2011. The company is scheduled to report its full year results on August 25. The analyst says that the defensive qualities and the low valuation of the stock support the positive recommendation.

UniCredit Bank expects Diageo to post 5% organic sales growth and 4% organic profits growth for the full year. The lower profit growth is on account of the company’s need to restore marketing expenditures to historical levels, the analyst says. Diageo is expected to report 8% EPS growth, indicating lower interest costs and some currency benefits, UniCredit Bank adds.

UniCredit Bank believes that Diageo would continue to outperform in the current uncertain environment, given the defensive quality of the stock in terms of high dividend yield, balance sheet and the geographical and product diversity of the business.

INVESTMENT HIGHLIGHTS

Industry leader
Broad geographic diversity

STOCK TRIGGERS

Aug 2011 full year
Nov 1Q

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