Today‘s Morning Meeting

Research evidence excerpt

Today‘s Morning Meeting

Europe Equity Research

Europe First to Market 04 August 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting

Diageo (Celine Pannuti, CFA) (DGE LN, N)

CMD Preview: A Test of Diageo’s Fighting Spirit

Ahead of Diageo's much-anticipated Capital Markets Day & FY26 results on August 6th (view our preview here), we assess

consensus in key areas of focus as new CEO Dave Lewis unveils his turnaround. Amid investor skepticism, the arduous task

will be to convince on the growth path ahead around 1) scale of price repositioning and reconnecting to volumes growth, 2)

length of turnaround in the USA which remains a key downside risk to consensus, and 3) articulating growth and investment in

Beer and RTD which could be growth accretive. We are less concerned of deep and broad-based price cuts than the market,

but caution rather on persistent volume weakness. 4) We also expect significant attention on further cost savings and

organisational simplification to fund investment and improve execution. We see potentially $1bn in gross cost savings to

support investments while avoiding a major margin reset. For FY27 we expect a soft guide on topline to be back in growth (vs.

consensus +1.6%), though a flat organic EBIT guide would likely be welcome. On MT guide, we believe management should

steer away from the traditional sales growth and margin targets which may disappoint. Overall, we leave our estimates

unchanged as we believe EBIT should be underpinned by cost savings but we worry that of lack of excitement around top line

recovery should limit opportunities for a rerating.

Rolls-Royce (David H Perry, CFA) (RR/ LN, OW)

Raising PT to 1,800p, for c20% upside over the next 17 months