Raising medium-term targets at the CMD In conjunction with today’s Capital Markets Day, management has raised the medium-term guidance to reflect the strong global demand backdrop for Spirits. Over FY23-FY25 Diageo expects to deliver organic net sales growth of 5-7% (vs. 4-6% in FY16-FY19) and organic EBIT growth ahead of this at 6-9%. In H1, organic net sales growth is expected to be ‘at least 16%’ (latest Vuma consensus +12%) and organic EBIT growth is expected to be ahead of this. We think that the FY22 consensus will come up to reflect the strong H1, but we expect the upgrade to the medium-term forecasts may be less significant. The valuation at 28.3x CY22E PE already assumed some upgrades were imminent, so we think the impact on the share price will be limited. Nevertheless we see this as a positive development, reflecting the strength of the category and Diageo’s position within it.