The Diageo share price has faced significant challenges recently, particularly during 2025. The company, listed on the FTSE 100, saw its share price decline by 35%, making it one of the index’s poorest performers. Over a three-year period, its shares have dropped by 55%, prompting investors to reassess their stance on the brand.
Will Diageo’s Affordable Share Price Double by 2026?
Despite the troubling numbers, some investors are contemplating whether this downturn presents a buying opportunity. Diageo is a major player in the spirits market, boasting well-known brands such as Guinness, Baileys, Tanqueray, and Smirnoff. In the full year of 2025, the company reported sales of $20.2 billion, with a nominal decline of just 0.1%.
Market Performance and Valuation
- The Diageo share price is currently at levels not seen since 2012.
- Its price-to-earnings ratio stands at 13.5, having nearly halved from its previous growth phase.
- Dividend yields have increased significantly, now approaching 5% compared to around 2% earlier.
Analysts forecast a substantial 75% rise in earnings per share by 2028. However, the company has encountered various challenges that cannot be overlooked. Reported operating profit plunged by 27.8% to $4.3 billion, influenced by significant restructuring costs and currency impacts.
Challenges to Growth
Diageo faces structural hurdles that could affect its recovery. U.S. tariffs have impacted its tequila and whisky imports, while a decline in alcohol consumption poses concerns. Recent statistics show that alcohol consumption in the UK has dropped over 25% in the past two decades, indicating a shift in consumer behavior.
Future Outlook and Analyst Predictions
Despite these challenges, Diageo remains consider significant growth potential. Analysts have set a median price target of 2,121 pence within the next year, representing a 30% increase. If combined with dividend returns, total returns could approach 35%.
- Most optimistic forecasts suggest a price target of 2,691 pence, showing a potential increase of 66%.
- Fresh leadership under Dave Lewis, known for his successful turnaround of Tesco, may also influence Diageo’s future.
While the future looks uncertain and economic pressures weigh on consumers, those who invest in stable companies like Diageo at lower prices may find value in the long term. Though doubling the share price by 2026 seems ambitious, patience may yield rewarding returns for investors willing to wait.
