Diageo's Sales Growth Outlook is Prudent, RBC Capital Markets Says

11:32 AM EDT, 08/24/2026 (MT Newswires) -- Diageo's (DEO) plan to revive sales growth through cost savings and a comprehensive retooling of the organization is credible, with a sustained increase in return on invested capital potentially supporting the share price, RBC Capital Markets said in a Monday note. The firm said the plan does not envisage a margin reset, with management instead expecting cost savings and organizational changes to provide the resources needed to revive sales growth. RBC estimated that adverse geographic mix, price investment, revenue management and the shift to ready-to-drink products could depress margins by around 2 percentage points. The planned cost savings equivalent to 4% of sales should cover that investment and enable medium term margin growth, the firm said. RBC said Diageo's sales growth guidance of 2.5% to 3% when it exits 2029 is prudent and consistent with what it considers achievable, although there remains considerable uncertainty around the company's ability to deliver that growth. RBC maintained its outperform rating on Diageo. Price: 96.60, Change: +1.98, Percent Change: +2.09