RBC Capital Sees Upside for Diageo (DEO) as New CEO Aims to Revitalize Mainstream Business with £20 Price Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 15 2026
0mins
Source: seekingalpha
- Mainstream Revival: RBC analyst highlights that Diageo (DEO) under new CEO Sir Dave Lewis will focus on revitalizing the neglected mainstream business to achieve sustainable volume growth, despite the company's overemphasis on luxury brands leading to increasing unaffordability.
- Strategic Execution Confidence: Although Lewis lacks experience in the spirits sector, analysts believe this will not hinder his ability to implement strategic changes, potentially unlocking new growth opportunities, particularly in the mainstream market.
- Price and Margin Pressure: While Diageo is expected to face pressure on price mix and margins, the company has ample cost-saving opportunities that analysts believe will help mitigate short-term challenges.
- Positive Catalyst Outlook: The anticipated release of the first-half fiscal year results in February and a potential Capital Markets Day are viewed as positive catalysts for the company's stock price, with RBC assigning a £20 price target to DEO, representing over 16% upside potential.
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Analyst Views on DEO
Wall Street analysts forecast DEO stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for DEO is 88.46 USD with a low forecast of 24.85 USD and a high forecast of 131.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
4 Analyst Rating
1 Buy
3 Hold
0 Sell
Hold
Current: 88.750
Low
24.85
Averages
88.46
High
131.00
Current: 88.750
Low
24.85
Averages
88.46
High
131.00
About DEO
Diageo plc is a United Kingdom-based international manufacturer and distributor of premium drinks. The Company offers beverage alcohol with a collection of brands across spirits and beer categories. Its segments include North America, Europe, Asia Pacific, Latin America and Caribbean, Africa, and Corporate and other. The SC&P segment manufactures products and includes production sites in the United Kingdom, Ireland, Italy, Guatemala and Mexico, as well as comprises the global procurement function. Its principal products include scotch whisky, whisk(e)y, vodka, tequila, gin, rum, liqueurs, beer, wine, and non-alcoholic spirits. Its collection of brands includes Johnnie Walker, J&B and Buchanan's whiskies, Smirnoff, Ciroc and Ketel One vodkas, Captain Morgan, Don Julio, Guinness, and Tanqueray, among others. It offers Ritual Zero Proof Non-Alcoholic Spirits (Ritual). It owns manufacturing production facilities across the globe, including distilleries, breweries, and packaging plants.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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