- Diageo
- 26 February 2026 13:48:14
Source: Sharecast
On Wednesday, Diageo cut its full-year guidance and halved the dividend, sending shares sharply lower, after weak trading in North America and China weighed heavily.
Citi, which rates Diageo at ‘buy’, said it was updating estimates to reflect the results, guidance change and dividend cut.
"The challenging US marketplace prompts a further cut to our H2 26E and FY27E OSG/EBIT divisional estimates," it said.
The bank is now forecasts a FY26 group organic sales decline of 2.4%, consistent with the company’s new guidance for a 2% to 3% drop. It also cut its FY27 group organic sales growth estimate from 3.2% to 1.9%.
"At EBIT, the CEO's observation that Diageo need to reinvest in the entire value chain, means we estimate FY26E organic EBIT -1.4%, (below management's flat-to-up-low single digit guide) and FY27E +2.1%, (previously +4.3%)," Citi said.
It said these factors prompt a 2.7% trim to its FY26 earnings per share forecast and a 4% trim to the estimate for FY27.
Citi said the 50% dividend cut rightly weighed on the stock price, but the scale of Wednesday’s move looks overdone.
"Near-term, income-fund outflow may be unhelpful but with expectations rebased to more realistic levels, further absolute downside should be limited," it said.