Insider: Diageo director deals as stock tipped to bounce

Diageo (LSE:DGE) share dealings at a price below £20 have been disclosed by one of its directors as the Guinness and Smirnoff owner continues to find itself in the eye of the tariffs storm.

The support of non-executive director and GSK finance boss Julie Brown, whose £53,000 investment took place last week at 1,972p, follows a 20%-plus reverse for shares so far this year.

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The FTSE 100-listed company started this month trading below 2,000p, a level rarely seen since 2016, shredding its reputation as a quality stock for the long term.

From April 2022’s 4,000p, the shares ended last week at 1,950p in a correction driven by factors including lower earnings expectations, exposure to a higher US bond yield and tariff risks.

The slide has continued despite several Buy recommendations in the City, including Berenberg’s 2,372p target price, UBS at 2,650p and Bank of America’s fair value estimate of 2,450p.

They reiterated their support following last month’s robust third-quarter update, when Diageo reported organic net sales growth of 5.9% and sought to reassure over tariffs by estimating that it expects to mitigate about half of the $150 million impact (£110 million).

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The company’s tequila and Canadian whisky brands are exempt from levies, while it said tariffs between the US and China do not have a material bearing on its business. It also disclosed a $500 million cost-savings programme as part of a wider plan to boost cash flow and margins.

Berenberg said the third-quarter sales beat was helpful for investor confidence, but that it may take a few more quarters of consistent performance to justify a valuation re-rating.

The slide in value has been felt by holders of Lindsell Train Ord (LSE:LTI) investment trust, whose annual report on Friday showed that Diageo contributed a 29% negative total return for 2024-25.

Portfolio manager and long-term supporter Nick Train believes the drinks giant has been harshly treated, noting that Diageo’s near 50% of profits from the United States could end up being a strategic advantage.

He wrote last week: “All attention is on the malign effect of tariffs, but little thought has been given, in our opinion, to the other side of President Trump’s stated policy, which is for substantial tax cuts and a strong domestic economy. A booming US economy would be a big positive for Diageo.”

Train has previously noted how Scotch, Irish Stout and Tequila are Diageo’s three biggest categories where the company has world-class brands, presenting a growth opportunity not available to its competitors.

Guinness has been one of the star performers in the portfolio, as highlighted by chief executive Debra Crew at a recent briefing in Dublin as she reiterated her commitment to the iconic brand after recent speculation that it may be sold.

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Bank of America said investors will have come away from the event convinced that Guinness still has significant potential, supported by Diageo’s brand building and marketing capabilities.

Deutsche Bank added: “The company indicated Guinness is now the No.1 brand in GB and Ireland and there is clearly a material growth opportunity in the US and elsewhere.

“That said, the US remains a challenging and competitive beer market with an 80/20 off/on-trade split, presenting a different challenge to Ireland and GB where the on-trade is 64% and 55% respectively.”

The bank has a target price of 1,960p, having warned in December that the three Ts of Tariffs, Temperance and Trade Down were reasons for caution on European distillers and brewers.

A director of B&M European Value Retail SA (LSE:BME) has marked today’s arrival of new chief executive Tjeerd Jegen by spending £20,000 on an increased stake.

Former Procter & Gamble executive Hounaïda Lasry, who has been a B&M board member since September 2023, made her purchase on Wednesday at a price of 262p. That’s a nine-year low for shares, below the level seen at the height of the pandemic sell-off in March 2020.

The FTSE 250-listed stock has fallen by more than 25% this year after the discounter trimmed guidance in February due to consumer and economic uncertainty and FX headwinds.

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With like-for-like sales in the UK down by 3.1%, recent annual results showed a 1.8% fall in operating profit to £591 million. The group is to pay a final dividend of 9.7p a share on 1 August, lifting the total by 2% to 15p in addition to the special dividend of 15p paid in February.

B&M has not given guidance on current trading but the company did flag that it is facing £75 million of cost headwinds before any mitigating action.

Peel Hunt, which has a price target of 500p, said: “There is still much to prove here, but the CEO inherits a fine business model and a growth machine that has just missed a few beats recently.”

The new boss has 25 years of retail leadership experience from roles in Europe, Asia and Australasia across the grocery, general merchandise and value sectors, including Tesco.

Bank of America recently cut its price target to 430p but reiterated its Buy rating.

It believes that positive like-for-like sales in the UK through 2025-26 will help rebuild confidence in the group's model, adding that a forward price/earnings multiple below 10 times was an attractive entry point as trends begin to improve.