Published: 5 December 2025
Diageo plc, the Johnnie Walker and Guinness owner, heads into the final weeks of 2025 under heavy scrutiny. The shares are trading close to decade lows, guidance has been cut, a new “turnaround” CEO is about to take charge, and today UBS downgraded the stock — yet most analysts’ 12‑month targets still suggest meaningful upside.
Below is a structured look at the latest price action, news, forecasts and analysis as of 5 December 2025.
Diageo share price today: near the bottom of its 12‑month range
As of the latest full trading session (Thursday, 4 December 2025), Diageo’s London‑listed shares (LON:DGE) closed at 1,682p, down 3.89% on the day from 1,750p. That leaves the stock roughly 31% lower year‑to‑date and about 36% below its 52‑week high of 2,619.5p. It is trading only just above its 12‑month low around 1,664p, with an estimated market capitalisation of about £39 billion. [1]
On Wall Street, the New York–listed American Depositary Receipt (ADR), Diageo plc (NYSE:DEO), last closed at $89.49 on 4 December. That is close to the bottom of a roughly $86.6–$132.3 12‑month range and represents a near‑28% decline in 2025, according to dividend and performance compilers. [2]
In other words, the share price already reflects a brutal de‑rating from the premium multiples Diageo enjoyed during the post‑pandemic spirits boom.
Fresh UBS downgrade highlights US spirits weakness
On 5 December 2025, UBS cut its recommendation on Diageo from Buy to Neutral and slashed its sterling price target from £22.50 to £18.50. The bank cited persistent weakness in the U.S. spirits market — a key profit engine for the group — and warned of further downside risks for the category. [3]
UBS notes that:
- Diageo has underperformed by about 32% in 2025 versus peers.
- The U.S. spirits business accounts for roughly 30% of Diageo’s FY25 sales. [4]
At the same time, UBS has turned relatively more positive on European brewers, arguing that spirits producers face tougher near‑term demand trends and valuation headwinds going into 2026. [5]
This downgrade comes on top of a string of target‑price cuts from other houses (including BofA, RBC and Bernstein) following Diageo’s early‑November profit warning. [6]
November profit warning: guidance reset after a weak Q1 FY26
On 6 November 2025, Diageo issued its Q1 FY26 trading statement for the quarter to 30 September and simultaneously cut full‑year guidance. [7]
Key points from the update:
- Reported net sales were US$4.875 billion, down 2.2% from US$4.986 billion a year earlier.
- Organic net sales were flat: volume grew 2.9%, but price/mix fell 2.8% as consumers traded down and certain premium segments weakened.
- Europe, Latin America & Caribbean and Africa saw positive organic growth, but this was offset by a 7.5% decline in Asia‑Pacific and weaker North America performance, including a 4.1% drop in U.S. spirits and a double‑digit fall in Chinese white spirits (baijiu). [8]
Crucially, management cut FY26 guidance:
- Organic net sales now expected to be flat to slightly down.
- Organic operating profit expected to grow only low to mid single digits, versus prior guidance of sales growth similar to last year (1.7%) and mid single‑digit operating profit growth. [9]
Reuters reported that the guidance cut sent Diageo shares down more than 5% in a single session, to levels last seen in 2015, leaving them almost 30% lower year‑to‑date at that point. [10]
CEO transition: Dave Lewis inherits a leveraged, slower‑growth giant
The operational wobble has coincided with a major leadership shake‑up.
- Former CEO Debra Crew departed abruptly in July 2025.
- CFO Nik Jhangiani stepped in as interim CEO while retaining a key financial role. [11]
- On 10 November 2025, Diageo announced that Sir Dave Lewis, the former Tesco chief executive, will become CEO from 1 January 2026. [12]
Lewis is widely known in the City as “Drastic Dave” for his willingness to take tough decisions at Tesco, where he cut costs, simplified the business and, notably, reduced the dividend to stabilise the supermarket’s finances.
A Reuters analysis piece on 10 November highlighted the scale of the task ahead:
- Diageo’s net debt stands at around 3.4× EBITDA, leading Fitch Ratings to assign a negative outlook on the group’s credit rating.
- Investors expect Lewis to push through cost savings and selective asset disposals (for example, in regional or non‑core businesses) while preserving flagship brands like Guinness and Diageo’s stake in Moët Hennessy. [13]
That raises an obvious tension: dividends versus deleveraging versus brand investment. Lewis cut Tesco’s payout to free up capital for a turnaround. Some investors fear that, if trading stays weak, Diageo’s dividend could face similar pressure.
Operational restructuring is already visible. Diageo announced in August that it will shut its Crown Royal bottling plant in Amherstburg, Ontario by February 2026, shifting volume elsewhere in North America. This week, Canadian union Unifor said roughly 200 workers had ratified a closure agreement that increases severance and benefits ahead of the shutdown. [14]
Dividend: high yield, thin safety margin
One of Diageo’s core attractions has long been its reliable dividend.
From the company’s own dividend history:
- For the year ended June 2025, Diageo will have paid a total dividend of 103.48 US cents per share, comprising:
- 40.50c interim dividend (31.48p), paid on 24 April 2025.
- 62.98c final dividend.
- On 20 November 2025, Diageo set the sterling equivalent of the final dividend at 47.91p per ordinary share, based on an exchange rate of US$1 = £0.76072.
- The final dividend was paid on 4 December 2025. [15]
Thanks to the falling share price, Diageo’s trailing yield has risen sharply:
- On the London line, data aggregators put the yield around 4.5–4.6%, versus a 12‑month average nearer 4%. [16]
- On the New York ADR, Diageo paid roughly $4.14 per share in dividends in FY25, which equates to a current yield of about 4.5% at ~$92. [17]
The catch is the payout ratio. Because earnings have fallen so sharply, some screens now show Diageo paying out more than 300% of trailing earnings on the ADR, with three‑year smoothed payout ratios still well above 200%. [18]
Part of that is due to one‑off charges and a temporarily depressed earnings base — but it illustrates how little room there is for error if trading deteriorates further or if the new CEO prioritises balance‑sheet repair.
Earnings trend: flat sales, sharply lower profits
According to data compiled by StockAnalysis from Diageo’s FY25 financials:
- Revenue in 2025 was about US$20.25 billion, essentially flat (–0.12%) versus US$20.27 billion in 2024.
- Net earnings fell to US$2.35 billion, a drop of roughly 39% year‑on‑year. [19]
The November Q1 update confirmed that momentum has not yet turned: organic sales were flat overall, with particular weakness in U.S. premium spirits and Chinese baijiu. [20]
Consensus forecasts collated by Simply Wall St and others suggest:
- Revenue growth of roughly 3% per year over the next several years.
- Earnings growth in the low‑ to mid‑teens annually, but off a depressed FY25 base and heavily dependent on cost savings and margin rebuild rather than rapid top‑line expansion. [21]
The picture is clear: Diageo is behaving more like a mature consumer‑staples utility than a high‑growth premium spirits play.
Analyst ratings and price targets: double‑digit upside, on paper
Despite the turmoil, most brokers remain broadly positive on the stock.
London listing (LON:DGE)
Investing.com’s compilation of 21 sell‑side analysts covering Diageo’s London shares shows: [22]
- Consensus rating: Buy.
- Average 12‑month price target: about 2,130–2,150p.
- Target range: roughly 1,573p (low) to 2,664p (high).
- Implied upside: in the region of 25–27% from the current c.1,682p price.
TipRanks, which also tracks broker research on the UK line, reports a very similar picture, with an average target of 2,165.9p and a high forecast above 2,700p, implying around 24% upside. [23]
New York ADR (NYSE:DEO)
For the U.S. ADR, Investing.com’s sample of six analysts shows: [24]
- Consensus rating: Buy.
- Average 12‑month target: about $106.
- Range: roughly $83–$127.
MarketBeat, which tracks a slightly larger group of Wall Street estimates, places the mean target closer to $119, implying 20–30% upside from the high‑$80s current price, although these figures pre‑date today’s UBS downgrade. [25]
At the same time, Bernstein and others have lowered their earnings estimates and target multiples after the November guidance cut, even while maintaining broadly positive ratings — a reminder that “upside” in spreadsheets is partly compensating for increased risk. [26]
Technical picture: downtrend still in force
From a technical analysis standpoint, Diageo still looks weak as of early December.
On the London line:
- StockInvest’s daily technical commentary for DGE.L (updated 4 December) notes that the share price fell 3.89% to 1,682p, with rising volume on a down day — a classic bearish signal.
- The stock sits in the lower part of a “wide and falling” short‑term trend channel.
- Their model projects a potential –6.95% move over the next three months, with a 90% probability that the price will end up between roughly 1,522p and 1,761p.
- Both short‑ and long‑term moving averages generate sell signals, and the stock has been downgraded from Hold to Sell in their framework. [27]
On the U.S. ADR:
- Intellectia’s AI‑based screener for DEO (as of 5 December) sees an overall bearish setup, with 4 sell signals and 2 buy signals across its suite of indicators.
- The 20‑day simple moving average sits below the 60‑day, and the price is below short‑term moving averages, signalling a bearish mid‑term trend.
- The tool highlights resistance in the mid‑$90s and support zones in the high‑$80s, and summarises the mid‑term outlook as leaning “Sell”. [28]
Technical traders, in short, are not yet seeing a convincing bottom.
Operational and regulatory flashpoints
Beyond macro demand and FX, several idiosyncratic risks are in play.
- Canada – Crown Royal bottling plant: as noted above, Diageo is closing its Crown Royal bottling facility in Amherstburg, Ontario by February 2026. Unifor says around 200 workers have now ratified a closure agreement that boosts severance and benefits. The company says the change will help optimise its North American supply chain. [29]
- UK – Belfast strike: Britain’s Unite union has announced an eight‑day strike in December at Diageo’s Belfast packaging site, where around 90 workers are seeking higher pay in line with another UK site. Diageo, however, insists it has contingency plans and does not expect any disruption to Guinness or Guinness 0.0 supply over Christmas. [30]
- India – tax and payment disputes: Diageo and Pernod Ricard’s industry group has sued Maharashtra state over a steep tax hike on affordable brands and the exclusion of foreign firms from a new lower‑tax category. Separately, global liquor groups including Diageo and Heineken are pressing the state of Telangana to settle about $337 million in overdue payments, warning of potential supply disruptions. [31]
- Tariffs and shifting habits: The sector continues to face U.S. tariffs on alcohol imports, margin pressure in key markets and a gradual shift in consumer behaviour toward moderation and low‑ or no‑alcohol options — themes highlighted by Diageo itself and by recent Financial Times coverage. TS2 Tech+1
None of these issues is individually existential, but together they add noise and risk to what investors might otherwise view as a “bond‑like” defensive stock.
Bull vs bear case going into 2026
The bull case
Supporters of Diageo argue that:
- The share price already discounts a lot of bad news: London DGE is more than 30% below its 2024 peaks and trades at a discount to many global consumer‑staples peers. [32]
- Diageo’s brand portfolio is exceptional, anchored by Johnnie Walker, Guinness, Smirnoff, Don Julio, Tanqueray and Baileys, with strong positions in both developed and emerging markets. [33]
- The dividend yield around 4.5–5% is unusually high for such a franchise, backed by decades of uninterrupted payments and regular increases. [34]
- The “Accelerate” cost‑saving programme and portfolio pruning under Dave Lewis could improve margins and free cash flow, allowing both deleveraging and sustained shareholder returns. TS2 Tech+1
- Consensus targets from multiple platforms still point to mid‑20s percentage upside over 12 months if the company executes reasonably well. [35]
From this perspective, Diageo looks like a blue‑chip quality compounder temporarily mis‑priced by cyclical and self‑inflicted setbacks.
The bear case
Sceptics respond that:
- Guidance already assumes flat or slightly lower sales in FY26 and only low‑ to mid‑single‑digit operating profit growth — hardly a growth‑stock profile. [36]
- Diageo is heavily exposed to slower‑growing or declining categories (spirits in mature markets) and must push harder in regions like Latin America and Africa just to offset weakness in the U.S. and China. [37]
- Leverage is elevated at about 3.4× EBITDA, with a negative outlook from Fitch, limiting flexibility if rates stay higher or if another downturn hits. [38]
- The dividend payout ratio is stretched, especially on the ADR, leaving limited room to grow the dividend if profits do not recover quickly. [39]
- Technical signals remain negative, with both DGE and DEO in downtrends and independent services (StockInvest, Intellectia) flagging them as sell or strong‑sell candidates. [40]
From this vantage point, Diageo risks becoming a value trap: an apparently cheap, high‑yield stock whose fundamentals never quite catch up with expectations.
What today’s developments mean for investors
Today’s UBS downgrade adds to the pressure on Diageo’s share price and crystallises many investors’ concerns about the U.S. spirits slowdown and the company’s execution risk.
Where does that leave shareholders and potential buyers?
- Existing holders are now heavily exposed to the execution of Dave Lewis’s turnaround plan. The main questions over the next 12–18 months will be whether he can:
- Stabilise U.S. and Chinese trends;
- Deliver on the “Accelerate” cost‑saving and restructuring agenda;
- Reduce net debt meaningfully;
- Preserve at least a flat or gently rising dividend without compromising balance‑sheet strength. www.diageo.com+3TS2 Tech+3Reuters+3
- Prospective investors face a classic trade‑off:
- On one hand, Diageo offers world‑class brands, a historically reliable dividend and analyst‑modelled upside of 20–30% from depressed levels.
- On the other, the share price remains locked in a downtrend, leverage is high, and the new CEO may choose to make tough decisions that could unsettle income‑focused shareholders in the short term.
At current levels, Diageo looks less like a simple “buy the dip” and more like a high‑quality but higher‑risk contrarian play. Position sizing, time horizon and risk tolerance are critical. This article is for information purposes only and does not constitute investment advice; investors should conduct their own research and, where appropriate, seek guidance from a regulated financial adviser.
References
1. stockinvest.us, 2. www.macrotrends.net, 3. www.investing.com, 4. www.investing.com, 5. www.investing.com, 6. www.marketscreener.com, 7. www.diageo.com, 8. www.diageo.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.marketscreener.com, 15. www.diageo.com, 16. dividendstocks.cash, 17. stocksguide.com, 18. stocksguide.com, 19. stockanalysis.com, 20. www.diageo.com, 21. simplywall.st, 22. www.investing.com, 23. www.tipranks.com, 24. www.investing.com, 25. www.marketbeat.com, 26. www.investing.com, 27. stockinvest.us, 28. intellectia.ai, 29. www.marketscreener.com, 30. www.marketscreener.com, 31. www.reuters.com, 32. www.digrin.com, 33. www.reuters.com, 34. www.diageo.com, 35. www.investing.com, 36. www.reuters.com, 37. www.diageo.com, 38. www.reuters.com, 39. stocksguide.com, 40. stockinvest.us
