The world’s biggest drinks group came under pressure this morning after a reluctant downgrade from a leading analyst.
While RBC Capital Markets insisted that Diageo, which is behind brands such as Johnnie Walker and Smirnoff, was “in a good place and executing competently”, it argued that this had already been priced into its shares. The company gave up 38½p to £25.20½ as the FTSE 100 inched higher.
Despite progress, cash conversion “looks set to remain in the bottom half of a peer group of consumer staples businesses”, the broker said. “We’re not doing this lightly,” it added, lowering its rating to “sector perform”.
Shortly before midday the FTSE 100 was up 7.67 points, or 0.1 per cent, at 7,673.21.
Smurfit Kappa, Europe’s largest cardboard manufacturer, was boosted by Numis, which lifted its target price from £26 to £28. With executives due to release their annual results next week, the broker is forecasting earnings of €1.23 billion (£1.08 billion). “Since management’s last update in November the operating environment has been favourable, with currencies the key risk,” its analysts said.
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Mining stocks also climbed. Rio Tinto was up 55p at £39.97½, Anglo American was up 22½p at £17.57 and Antofagasta was up 10¾p at 951¾p.
The FTSE 250 was trading up 74.81 points, or 0.36 per cent, at 20,690.39.
Greencore Group surrendered 1¾p to 207¼p. Late in the morning session the Irish sandwich and sushi maker announced that it was selling its Hull-based cakes and desserts business to Bright Blue Foods.
On the junior market Angling Direct was flat despite fishing for investors’ attention. The retailer is opening a new store in Stoke, taking its total number of branches to 21, “with others following in 2018”.