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Coca-Cola

Coca-Cola, the world’s largest soft drink manufacturer, reported better-than-expected earnings and revenue in the second quarter, largely driven by a recovery in markets where coronavirus-related uncertainty has abated, sending its shares up over 1% on Wednesday.

The most popular and biggest-selling soft drink reported earnings per share of $0.68, beating analysts’ expectations of $0.56. The company said its net revenue surged over 41% to $10.13 billion, beating the Wall Street consensus estimates of $9.32 billion.

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Coca-Cola said it expected to deliver organic revenue (non-GAAP) growth of 12% to 14% and comparable net revenues (non-GAAP) to grow in the range of 1% to 2% in the full year 2021. The company also expects to deliver comparable EPS (non-GAAP) growth of 13% to 15% versus $1.95 in 2020.

Following the upbeat results, Coca-Cola shares 1.28% to $56.55 on Wednesday. The stock rose over 3% so far this year.

Analyst Comments

“Short term, we see a well-above-consensus post-COVID-19 topline/EPS recovery ahead through 2022, and longer-term, see a return to pre-COVID-19 outsized sales growth vs. peers, improved execution with a reorganization, and higher margins with productivity/rational industry environment,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“We are Overweight Coca-Cola (KO) after significant stock underperformance given COVID-19 impacts on KO’s on-premise eating / drinking out business (~40% of sales) and gas & convenience (~10%) with gov’t mandated restaurant closures and reduced foot traffic. COVID-19 impacts drove a large -9% organic sales decline in 2020, but we forecast a recovery to ~14.5% organic growth in 2021 and ~8% in 2022 with a post-COVID-19 recovery in away-from-home. We believe Coke’s LT topline growth outlook is above peers, with strong pricing power, and favorable strategy tweaks under Coke’s CEO, including increased innovation and a cultural shift towards a total beverage company.”

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Coca-Cola Stock Price Forecast

Ten analysts who offered stock ratings for Coca-Cola in the last three months forecast the average price in 12 months of $61.20 with a high forecast of $64.00 and a low forecast of $58.00.

The average price target represents an 8.22% change from the last price of $56.55. From those ten analysts, six rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $65 with a high of $75 under a bull scenario and $40 under the worst-case scenario. The firm gave an “Overweight” rating on the soft drink company’s stock.

Several other analysts have also updated their stock outlook. Cowen and company raised the target price to $60 from $57. JPMorgan lifted the target price to $59 from $56. Jefferies increased the target price to $59 from $57. Guggenheim raised the target price to $59 from $56.

“Our FY21-23 EPS ests are little changed (we raised our forecast into KO’s 2Q print) and maintain our Hold post KO’s strong 2Q. The recovery in AFH channels, continued resilience in AH channels (notably in DMs + for new occasions), improved market share, and commitment to restoring A&M are all encouraging. We like the strategic direction; however, expectations appear reasonable, and we see less scope for shares to re-rate higher at ~25x P/E. Hold, $60 price target,” noted Kevin Grundy, equity analyst at Jefferies.

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