Diageo Heads Into Results With Borrow Easing But Bears Still Present

DEO reports full-year results on August 6 after a bruising prior print left the stock sharply lower.

The most notable shift heading into Thursday is in the lending market — and it tells a story of bears stepping back. Availability loosened dramatically in the final days of July, climbing to nearly 48% from as low as 14% in mid-July. That reversal corresponds with a 4% week-on-week decline in shares short, bringing estimated short interest down to roughly 3.9 million shares. Cost to borrow has also eased, falling 26% over the week to just 0.87% — the lowest reading in months. The stock itself has recovered well, up 6% on the week and 10% over the past month to close at $88.06, though it gave back 1.1% on Friday. Options positioning is muted and slightly more call-tilted than usual — the put/call ratio at 0.57 is marginally above its 20-day average of 0.56, essentially flat, and far from the defensive extremes the 52-week high of 1.09 would represent.

The bull and bear debate centres on the pace of recovery from a disastrous February print. That half-year result, reported February 25, sent the stock down more than 16% in a single session — the worst reaction in recent memory — and extended losses to nearly 20% over the following five days. Since then, the stock has recovered some ground, and TD Cowen upgraded to Buy in late June with a $93 target, modestly above the current price. Bank of America maintained its Buy rating last September even as it trimmed its target to $109. Bulls point to portfolio depth in premium spirits, pricing resilience, and the prospect that the worst of the volume headwinds — particularly in Latin America and Asia travel retail — are already absorbed. Bears, including UBS (which downgraded to Neutral in December 2025), question the pace of organic revenue normalisation and whether margin targets are credible given ongoing consumer trade-down pressures.

A notable institutional angle is emerging in the ownership data. Artisan Partners added over 31 million shares, bringing its holding to 5.2% of the company. Causeway Capital and Invesco also added aggressively, each adding more than 24 million shares. First Eagle built a position of 1.6% essentially from scratch. This cluster of conviction buying from value-oriented managers suggests the sharp de-rating following February's miss has attracted fresh long-side capital — a counterweight to the still-active short book.

The August 6 print will test whether Diageo can show enough sequential improvement in organic growth to validate the recovery thesis that these institutional buyers and the TD Cowen upgrade are betting on — or whether the February warning was the opening act of a longer-running structural reset.