UBS Downgrades Diageo (DEO), Flags Risks in U.S. Spirits Market

Diageo plc (NYSE:DEO) is included among the 11 Worst Performing Dividend Stocks Year-to-Date.

On December 3, UBS downgraded Diageo plc (NYSE:DEO) to Neutral from Buy and also trimmed the stock’s price target to 1,850 GBp from 2,250 GBp. The analyst noted the stock’s share price decline this year and sees continued downside risks in the US spirits market. UBS also questions the likelihood of outperformance in the first half, highlighting weakness in Tequila and Diageo’s ongoing market share losses.

Diageo plc (NYSE:DEO) reported declines this year because of sluggish sales in Latin America, under-pressure consumers in the UK and US, declining alcohol consumption among Gen Z, and the growing market of GLP-1 weight-loss drugs. However, the company’s premium brands, including Johnnie Walker, Crown Royal, Smirnoff, Baileys, and Captain Morgan, are giving a glimmer of hope as things are not completely bleak.

In fiscal Q1 2026, Diageo plc (NYSE:DEO) organic net sales were flat, and its organic volume grew by 2.9%. The company also experienced growth in Europe, Latin America and Caribbean (LAC), and Africa; however, weakness was seen in Chinese white spirits and a softer US consumer environment.

Despite these setbacks, Diageo plc (NYSE:DEO) remains upbeat on its performance in the coming year and has raised its guidance for organic sales and operating profit. The company also expects to deliver approximately $3 billion in free cash flow in 2026.

Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage company that has operations in nearly 180 countries.

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