As previously reported, Societe Generale analyst Toby McCullagh downgraded Diageo to Sell from Buy after assuming coverage of the stock. With a "demanding valuation" and "more pedestrian execution ahead," the analyst thinks the shares are more than fully valued. McCullagh argues that staples stocks are expensive because of low bond yields, and within that, spirits companies are expensive because of long duration, S-Shaped demand and growth profiles. However, Diageo is at multi-year relative highs against staples and beverages, which he does not think is warranted for normalizing growth.