Diageo Kept at Outperform as RBC Notes New Strategic Plan

02:53 AM EDT, 08/24/2026 (MT Newswires) -- RBC Capital Markets reiterated its outperform rating on Diageo (DGE.L), with a price target of 20 pounds sterling, after the wine and spirits maker unveiled a new strategic plan designed to restore growth without sacrificing margins. "It is hard to see how Diageo's big reveal at the Capital Markets Day on 6 August could have gone much better. [Chief Executive Officer Dave Lewis'] plan does not envisage a margin reset; rather, management expects that a forceful approach to cost saving, along with a comprehensive retooling of the [organization], will provide the wherewithal to revive sales growth. We can't be certain that this will happen, but it is credible in our view," according to a Monday note. Under the plan, Diageo expects cumulative savings of $1 billion over the next three years, driven by operational efficiencies and supply chain optimization. "[Return on invested capital] is an output of this plan - one that forms part of management's long-term incentive package - rather than an explicit target, unlike, say, sales and profit growth or cash flow. But it is a really important output. Diageo's share price performance has tracked ROIC for a decade and more. If Diageo can deliver a sustained increase in ROIC - and that's the implication of the targets that it has put out there - then we should expect good things from the share price," analysts added. On the earnings side, RBC trimmed its revenue forecasts for fiscal 2027 and 2028 and raised its operating diluted EPS and dividend per share projections for the same two years.