Diageo share price outperforms as Goldman Sachs hikes stance on group

Analysts flag acceleration in organic sales growth

Diageo share price outperforms as Goldman Sachs hikes stance on group

Shares in Diageo (LON:DGE) have advanced in London in today’s session, as analysts at Goldman Sachs hiked their rating on the Johnny Walker and Smirnoff owner. WebFG News reports that the analysts have pointed to a likely acceleration in organic sales growth.

As of 10:12 BST, Diageo’s share price had added 1.30 percent to 2,823.50p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.47 percent higher at 7,687.23 points. The group’s shares have added more than 23 percent to their value over the past year, as compared with about a 3.8-percent gain in the Footsie.

Goldman Sachs upbeat on Diageo

Goldman Sachs lifted its rating on Diageo from ‘neutral’ to ‘buy’ today, and hiked its price target on the shares from 2,667p to 3,160p. WebFG News reports that the analysts reckon that organic sales growth will accelerate to 5.6 percent for FY19-20 from just one percent in FY14-16 and 4.3 percent in FY17-18, with Casamigos boosting growth in the US, India headwinds abating and emerging markets continuing to inflect.

“We expect evidence of accelerating organic sales growth and margin delivery to drive outperformance,” the broker pointed out. Diageo is scheduled to update investors on its full-year performance on July 26 and Goldman Sachs expects to see organic sales growth of 4.1 percent, 100 basis points of organic margin expansion and earnings per share of 119p.

Other analysts on blue-chip group

Earlier this week, Shore Capital reaffirmed Diageo as a ‘buy,’ without specifying a price target on the shares, while Liberum Capital continues to see the company as a ‘sell’. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 2,692.14p.

As of 10:42 BST, Friday, 13 July, Diageo plc share price is 2,114.75p.

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