The Diageo (LSE: DGE) share price did a shocking thing yesterday (5 December). It sprung suddenly into life, jumping 3.72%. I didn’t see that coming.

The FTSE 100 spirits giant has possibly been the most disappointing performer in my portfolio this year. While Ocado Group and Aston Martin Holdings have fared worse, I knew they were hyper-volatile and hyper-risky when I bought them. But I expected more from Diageo.

I bought Diageo shares on 24 November last year, a couple of weeks after it issued a profit warning following a sales slump in Latin America and the Caribbean market. It seemed like the perfect opportunity to buy the stock on the cheap, but the shares continued to struggle.

Is this FTSE 100 stock finally on the mend?

Latin America isn’t the only issue. Drinkers in China, Europe and the US have also been less enthusiastic, as the cost-of-living crisis rumbles on. Some have been buying less booze. Others have traded down from Diageo’s premium options. Then there’s the growing suspicion that Gen Z isn’t drinking at all.

Diageo’s shares are down 36.45% over two years and 13.65% in the last 12 months. Yesterday’s jump made only a small dent in this, but it did make me feel more optimistic about the year ahead.

The mini-rally was down to a note from Jefferies, which upgraded Diageo from Hold to Buy on Thursday. The broker lifted its price target to 2,800p from 2,300p. Today, the shares trade at 2,447p, so that would mark an increase of 14.4%. Since I’m personally down 11.7%, after dividends, that would put me in the black.

Jefferies said: “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”.

I think 2025 could be bumpy too

Investors will have to be patient as Jefferies warned “companies do not change overnight”. Next year could be a “trough year” but the fun will pick up in 2026 with more to follow in 2027, as the board places “an emphasis on stronger returns”.

So to answer my own question, I shouldn’t get too excited about 2025. I can live with that for two reasons. First, investing is a long-term pursuit. I plan to hold Diageo for years, or potentially decades. Over such a timescale, 2027 is the near term.

Second, shares often pick up before the good news arrives, rather than afterwards. Sometimes they pick up for no obvious reason at all. With Diageo trading at just 17.92 times earnings, low by its standards, investors may see this as a bargain and take an early position.

There is one clear and obvious risk next year. The US is Diageo’s single biggest market. Net sales of £8.51bn in North America narrowly beat Europe’s £8.02bn. If President Donald Trump follows through on his import tariff threats, and extends them to UK companies, Diageo’s sales could take a big hit. So could its share price.

I have a relatively large position in Diageo and won’t add to it. I’m cautiously optimistic after yesterday, but I’m not ecstatic.