Shares of Soft Drink Giant Coca-Cola Rise on Earnings Beat

Coca-Cola shares rose nearly 2% on Thursday after the world’s largest soft drink manufacturer reported better-than-expected earnings and revenue in the fourth quarter, but this year’s prediction was disappointing.

The most popular and biggest-selling soft drink maker reported quarterly adjusted earnings of $0.45​ per share, beating the Wall Street consensus estimates of $0.41 cents per share.

The company’s revenue jumped over 10% to $9.47 billion from a year earlier. That too topped the market expectations of $8.96 billion. However, its adjusted operating margin plunged to 22.1% from 27.3% a year earlier in the December quarter.

The company said higher inflation will continue to weigh on the company’s profits this year and predicted a weaker-than-expected profit outlook. In 2022, Coke expects comparable earnings per share growth of 5% to 6%, while analysts’ expectations were for 6.1% growth.

Coca-Cola stock traded nearly 2% higher at $62.18 on Thursday. The stock rose nearly 5% so far this year after surging about 8% in 2021.

Analyst Comments

“Net, we expect a positive stock reaction to a sizeable Q4 topline beat, with a very strong 19% underlying organic sales result in Q4 (using 9% unit cases and 10% price/mix), and robust 7-8% organic sales growth guidance for 2022, confirming our believe that with strong price/mix, limited demand elasticity, a post COVID away from home recovery, and strong underlying LT secular growth drivers, consensus revenue growth forecasts (6-6.5% for 2022) and market-implied growth expectations are too low,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“2022 EPS guidance was also good news in our minds, slightly above consensus despite likely being conservative, while Coke is also swallowing a ~2% greater negative EPS impact than expected from taxes/FX, meaning underlying fundamentals are even further above consensus. Net, Q4 results and FY22 guidance offer very clear confirmation in our view that Coke is poised to post topline upside vs consensus and market expectations (see video for our OW thesis here) short, medium, and long-term.”

Coca-Cola Stock Price Forecast

Twelve analysts who offered stock ratings for Coca-Cola in the last three months forecast the average price in 12 months of $65.33 with a high forecast of $71.00 and a low forecast of $55.00.

The average price target represents a 5.32% change from the last price of $62.03. Of those 12 analysts, 10 rated “Buy”, two rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $71 with a high of $82 under a bull scenario and $40 under the worst-case scenario. The investment bank gave an “Overweight” rating on the soft drink company’s stock.

Several analysts have also updated their stock outlook. JP Morgan raised the target price to $64 from $63. Credit Suisse lifted the target price to $66 from $63. Jefferies increased the target price to $63 from $60. CFRA upped the target price by $10 to $68.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator giving a strong buying opportunity.

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