RBC Upgrades Diageo to Outperform on Potential for Sustainable Volume Growth

04:26 AM EST, 01/06/2026 (MT Newswires) -- Diageo (DGE.L) may be able to restore "relatively predictable" volume growth and cash generation if it revitalizes its mainstream business, RBC Capital Markets said, upgrading the British alcoholic beverage company to outperform from sector perform. "If Diageo is to restore its fortunes, it needs to revitalise its mainstream business and accept that the luxury portfolio is an important, but limited, part of the whole. Mainstream is where incoming CEO Sir Dave Lewis has spent his career," according to a Tuesday note. "We forecast margins to fall by 200bps to fund price reductions, before slowly starting to recover, but volume to revive, while lower working capital outflows and reduced capex will limit the cash flow impact." The price target of 20 pounds sterling was unchanged, as analysts expect the possible investor rerating of the lower EPS to reflect "improved confidence and visibility."