Broker snap: Credit Suisse keeps 'outperform' rating for Diageo after in-line H1

31st Jan 2013 11:34

Credit Suisse has retained its 'outperform' rating and 1,900p target price for Diageo after an in-line set of first-half results from the drinks company. "Overall, we think that Diageo is where it expected to be at the interim stage, albeit with some give and take between the regions, and as a result the company is reiterating its medium-term guidance," the broker said.Organic growth came in at 5.1%, broadly in line Credit Suisse's estimate, though margins and underlying earnings came in around 2-3% higher than forecasts.Results were boosted by a solid performance in Emerging Markets, which managed to offset worse-than-expected growth in North America and continued weakness in Europe. The broker said: "If the developed world perhaps disappointed a touch on revenue growth, the other regions were collectively up 10% led by LatAm (+16.7%), with Asia +5.5% (with a weak Korea) and Africa +9.4% (despite a soft Nigeria). Importantly taken together these regions saw organic margin increase of nearly 200 basis points as Diageo begins to get good returns on all the investments it has put into these regions."Credit Suisse said it doesn't expect material changes to its underlying estimates at this stage.Shares were up 1.49% at 1,880.56p by 11:34 on Thursday.BC