Diageo (LON:DGE) is set to outperform its rivals, according to Credit Suisse, which believes a newly accelerated focus on higher volume sales in mainstream and ‘value’ spirits will be a driver of growth.
Analyst Sanjeet Aujla, who upgraded the share to ‘outperform’ from ‘neutral’, in a note said: “We believe DGE's increased focus on volume growth can help draw a line under two years of earnings downgrades.”
“We believe DGE's accelerated focus on mainstream/value spirits is a necessary move to broaden its pricing architecture, which creates new opportunities whilst addressing consumer polarisation and the high dependence on premium scotch.”
The Swiss investment bank’s price target is lifted to 2100p from 1780p.
Credit Suisse was also the source of another of Thursday’s key City calls, as it downgraded BAE Systems (LON:BA.) to ‘neutral’ from ‘outperform’.
The aerospace and defence group is impacted by the loss of an anticipated Typhoon fighter jet contract with Saudi Arabia and, according to analyst Olivier Brochet, the share is showing “a lack of momentum”.
“We now see a possibility that the recent events between the UK and Saudi Arabia will impair BAE Systems' ability to sign a hoped-for contract for a follow-up batch of 48 Typhoon combat aircraft. Indeed, the first and foremost driver of a major defence export sale is political will (of both parties),” he said in a note.
Elsewhere, Liberum Capital took a bearish view on mining majors BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO), both of which were cut to ‘sell’ from ‘hold’.
Antofagasta (LON:ANTO), meanwhile, saw its price targets pared by both JP Morgan Cazenove and Deutsche Bank – which rate it ‘neutral’ and ‘hold’ respectively.
The same two investment banks also downgrade price targets for Lloyds Banking Group (LON:LLOY) after Wednesday’s disappointing financial results.
JP’s Raul Sinha highlighted that the bank’s quarterlies were below expectations, nevertheless “long term dividend attractions” remain.