The company’s listed EM subsidiaries have reported better-than-expected sales trends in the latest quarterly updates. India sales are down only c. 3% on an underlying basis, China sales are up nearly 20%, and Nigeria sales are up nearly 12%. Profits are not as robust, due to adverse mix and A&P spend. The US Spirits market has proved incredibly resilient through the crisis; Diageo’s new head of North America underscored this on a recent regional update call. The US market is growing close to 10% y-o-y, significantly higher than the c. 4% growth reported in recent years; within this, premiumisation is driving unusually strong price/mix of 5%. There is “some” element of retailer re-stocking in the growth figure, so the underlying performance is a little lower – nevertheless it is clear the US is performing very well. This may be the result of the relatively more resilient economy (as the market opened up more quickly than many other developed markets), lower gas prices and the boost from stimulus payments earlier in the year – all of which may be leading American consumers to feel more confident about spending. We now expect FY21E organic sales to grow 5.7%, after falling 8.3% in FY20; but this still implies that FY21E net revenue will be below the FY17 level and FY21E EBIT will be below the FY18 level. Relative to our prior expectations, our FY21E adj. basic EPS increases by 5% to 111.2p and our FY22E adj. EPS increases by 4% to 119.5p; for the H1 period, which is normally reported in late January, our adj. basic EPS estimate is 65.4p. Our TP rises to 2,400p (from 2,150p) to reflect our changed estimates and more robust performance in some of the company’s key markets. We apply a CY21E PE of c. 21x to derive our TP; this is in-line with the average rating on the stock over the past 5 years.