Keep Walking...down That there may be downside to consensus estimates should come as little surprise, but we suspect the quantum may. Driven by a combination of our LFL estimates and scope (we assume that fair-value adjustments that boosted Diageo''s EBIT in FY23 do not repeat) our North America FY24e / FY25e EBIT estimates are c.-10% and c.-12% below Visible Alpha consensus. Industry trends are alarmingly weak in Diageo''s largest market The US is Diageo''s largest market accounting for c.50% of profits. US spirits industry volume trends have remained inexplicably lacklustre throughout 2023 and have decelerated in recent months. Diageo''s US spirits vols. declined -3.1% in fiscal H124 per Circana (off-trade sell-out) data and -4.2% in H124 (to Nov-23) per NABCA. We believe consensus expectations for a return to North America volume and EBIT growth in H224e are optimistic and given the volume context incremental pricing in CY24 is likely to be very limited. But is this not priced into the shares? While Spirits have experienced a material relative de-rating, we believe that earnings downgrades of this magnitude are not priced into Diageo''s valuation. The stock now trades at relatively stretched c.2.8x P/E-point premium to Neutral rated Pernod Ricard on our FY25e estimates. We see risk that GLP-1 fears spread to US spirits We suspect noise around GLP-1s will return in 2024 as drug availability increases in the US. Preliminary data from Numerator suggests US shoppers taking GLP-1s reduce their alcohol spend per trip vs. a control group. This may add another layer to the negative sentiment on US spirits. We downgrade Diageo to Underperform We downgrade Diageo to Underperform (from Neutral). TP to GBp2,500 (from GBp3,000).