The Diageo share price will be in focus on Thursday after the company published an optimistic trading statement. The DGE stock rose by more than 1% on Wednesday and ended the day at 3,561p, which was slightly below the year-to-date high of 3,600p.
Diageo business picking up
Diageo is a leading alcoholic brand with business operations globally. The company is best known for brands like Guinnes, Sminnorf, and Bailey’s.
Diageo business was hit during the pandemic as most countries ordered the closure of hotels and other entertainment spots. Indeed, many companies in the industry like JD Weatherspoon recorded significant losses in 2020.
However, the situation is changing this year as the industry rebounds. Many countries have allowed bars, restaurants, and event venues to reopen.
As such, the company’s business is booming. In a trading commentary today, the company said that it had started the fiscal year well, with momentum growing across all regions. Europe, in particular, has been a key part of the company’s growth. However, regions like North America, Africa, Asia Pacific, and Latin America are seeing some volatility. The CEO said:
“We have made a strong start to fiscal 22, with organic net sales momentum across all regions. This reflects excellent execution, as we benefit from resilience in the off-trade and continued recovery in the on-trade. However, we expect near-term volatility to remain, including the potential impact of any future waves of Covid-19.
Diageo share price forecast
The daily chart shows that the Diageo share price has done relatively well in the past few months. This year alone, the stock has risen by more than 25%. Recently, however, the stock has been in a tight range. It has remained between the key support and resistance level at 3,425p and 3,600p. The stock is also above the 25-day and 50-day moving averages.
Therefore, the DGE share price will likely break out higher in the near term as investors target the next resistance at 3,700p. This view will be invalidated if the price moves below 3,500p.