LONDON (ShareCast) - (Sharecast News) - Diageo fizzed higher on Thursday as UBS upgraded the shares to 'buy' from 'sell and hiked the price target to 2,920p from 2,300p, saying it sees upside risks to the US business.
"Our analysis shows its sell-out trends are running +3.6%, significantly outperforming a still weak Spirits industry, and the strong growth momentum behind key brands Don Julio and Crown Royal can be sustained," UBS said.

"Following -31% earnings per share downgrades over the past two years, we think investors can gain comfort the business is towards the end of its earnings downgrade cycle."

UBS said its expects some destocking to persist, driving H1 US Spirits shipments flattish. However, with strong growth of Guinness in the on-trade channel, the bank forecasts H1 North America organic sales up 0.6% versus consensus expectations for a 2.4% decline.

"There could be some upside risk to our North America forecasts if sell-out trends remain robust into December," it added.

At 1000 GMT, the shares were up 3.8% at 2,583p.

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