Morgan Stanley Met With Coca-Cola's CFO And Left Satisfied

Morgan Stanley analysts met with The Coca-Cola Co KO CFO John Murphy and the executive reinforced the case for being bullish on the stock.

The Analyst

Morgan Stanley analyst Dara Mohsenian maintains an Overweight rating on Coca-Cola Co with a $60 price target.

The Thesis

Coca-Cola showed a "solid" 5% or more topline growth over the past eight quarters and conversations with Murphy suggest this trend can continue for three reasons, Mohsenian wrote in a note. These reasons include: improved execution and relationships with bottler partners worldwide, a focus on smaller and higher priced goods and new product innovation, which accounts for 25% of total revenue versus 15% just two years ago.

Management said its performance in emerging markets are performing well and expects a macro recovery to be seen in Brazil and South Africa, Mohsenian wrote.

On the other hand, he said, the environment remains difficult across Mexico, Nigeria and Argentina.

Meanwhile, the company is taking steps to offset large potential unfavorable moves in the foreign exchange market, including taking more local pricing in emerging markets.

However, the recent appreciation in the U.S. dollar isn't much of a concern, for the time being.

Other takeaways from the meeting with Coca-Cola's executive team include a path towards improving free cash flow conversion in the near-term. Also, management looks to be more interested in integrating and expanding recent acquisitions in the near-term, and medium- to longer-term M&A plans will focus on deals that can be scaled on a global basis.

Price Action

Shares of Coca-Cola Co were trading flat Tuesday.

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