The Diageo (LSE: DGE) share price is up 10% in simply over per week. Given its terrible latest efficiency, that nearly looks like an Nvidia-type surge!

Significantly although, it’s been a nice shock as a Diageo shareholder to see it rising like a well-poured Guinness. As I write right this moment (12 December), the inventory’s really main the FTSE 100, with a 3% achieve.

Zooming out nonetheless, these positive aspects barely even register on a share price chart — a mere flick upwards on a rollercoaster that’s been hurtling downwards for 3 years.

The inventory’s nonetheless down 36% since late 2021.

However why has the share price all of a sudden sprung into motion? Let’s take a better look.

Brokers are turning cautiously constructive

Diageo shareholders owe the analysts at Jefferies and UBS a pint for the latest rise. They’ve upgraded their rankings on the inventory to Purchase.

On 5 December, Jefferies wrote that 2025 could also be a “trough year” for the spirits big, with 2026 marking a restoration. It stated: “We think that Diageo will start to look different as confidence in spirits growth increases and under a new, heavyweight CFO, where we see a renewed focus on growth, profit and cash.”

At present we had information that UBS has improved its ranking from Promote to Purchase, saying that Diageo manufacturers Don Julio (tequila) and Crown Royal (whisky) had been outperforming a weak US spirits market.

The Swiss financial institution raised its price goal to 2,920p from 2,300p. If it reached that, which is way from assured, then we’d be a 14% achieve from right this moment’s price of two,551p.

That might really put my holding again within the black on a price price foundation.

Splitting the G

Talking of black, Guinness continues its outstanding reinvention. The legendary Irish stout has turn into so common that UK pubs are continuously working out and Diageo is struggling to maintain up with demand.

That is partly down to all these on-line influencers ‘splitting the G’. That is the development the place younger drinkers take an enormous first swig of Guinness and purpose to achieve midway down the letter ‘G’ on the pint glass.

Diageo can also be tapping into the alcohol-free drinks development, with Guinness 0.0 now accounting for almost 3% of whole Guinness quantity worldwide.

A sticky state of affairs

The outlook’s a bit murkier for tequila although. Donald Trump has introduced a plan for 25% tariffs on all Mexican imports to the US. Diageo owns tequila manufacturers Casamigos, Don Julio, DeLeon, and 21 Seeds.

Not like Guinness, which is related to Eire however doesn’t need to be brewed there, premium tequila can’t so simply keep away from the proposed tariffs. It have to be distilled from the blue agave plant in Mexico.

Again in November, these analysts at Jefferies estimated that costs must rise 10% to offset the affect of a 25% import tariff. The danger is that US drinkers may not swallow such a hike, thereby squeezing gross sales and income.

In fact, we don’t know what tariffs (if any) there’ll be, or whether or not tequila importers will likely be exempt.

Inventory valuation

Diageo shares look respectable worth, buying and selling at round 17.5 instances subsequent yr’s forecast earnings. There’s a 3.4% forward-looking dividend yield too.

My portfolio has sufficient Diageo shares already. However I feel they’re properly value contemplating right this moment for long-term traders.