Diageo backed by RBC as turnaround plan points to improving returns

What Brokers Say Retail & Consumer Written by: Ephrem Joseph 13:30 Mon 24 Aug 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Ephrem Joseph Ephrem began his journalistic journey at Proactive in June 2021. With a strong academic background in Information Technology, his expertise particularly lies in the field of Cyber Security, Management Information Systems and Computer Forensics. Before joining Proactive, Ephrem worked as a researcher and lecturer at a number of leading universities, including the University of Portsmouth's Institute of Criminal Justice Studies, the University of Winchester’s Institute of Policing, and Jain... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Diageo PLC ( LSE:DGE ) View Price & Profile Diageo backed by RBC as turnaround plan points to improving returns Published: 13:30 24 Aug 2026 BST Diageo PLC (LSE:DGE) has retained an 'Outperform' rating from RBC Capital Markets, with the broker maintaining its £20 price target as it backed chief executive Sir Dave Lewis’s turnaround strategy. RBC said the plan unveiled at Diageo’s August 6 Capital Markets Day was credible despite uncertainty surrounding the global spirits market. The broker believes cost savings and organisational changes should allow Diageo to invest in pricing, revenue management and ready-to-drink products without requiring a major margin reset. It estimates adverse geographic and brand mix, pricing investment and the ready-to-drink (RTD) shift could weigh on margins by around 2 percentage points, but said planned cost savings should more than offset the pressure. RBC forecasts a 230 basis point increase in earnings before interest and tax (EBIT) margin by 2029. Organic sales growth is forecast at -0.3% in 2027, 1.4% in 2028 and 2.6% in 2029, while net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to fall from 3.7 times in 2026 to 2.2 times by 2029. RBC said improving return on invested capital could be particularly important for the shares, given the close relationship between return on invested capital (ROIC) and Diageo’s share-price performance over the past decade. The £20 target compares with a reference price of 1,719p, implying around 18% upside. Continue reading