Analysts Rally Behind Coca-Cola: Foresee Strong Growth and Resilience Amid Economic Challenges

On Tuesday, Coca-Cola Company KO reported second-quarter FY24 sales growth of 3% year-on-year to $12.4 billion, beating the analyst consensus estimate of $11.753 billion.

Below are comments from analysts along with current ratings and price targets.

BofA Securities – Reiterates Buy, $70 price target

Analyst Bryan D. Spillane said that despite a challenging fundamental consumer staples backdrop, underlying results for the quarter and 1H24 are at the top end of the plan, driven by balanced sales growth.

The analyst sees the second quarter as a textbook quarter for how Coke’s operating model is capable of weathering macroeconomic uncertainties on multiple fronts. 

Risks like tepid weather in Europe, hyperinflation and shipping/conflict related disruptions notwithstanding, the analyst sees little risk in KO achieving raised organic sales and EPS guide for the year.

For FY24, the analyst expects organic sales growth of +10%, up from the previous 9% estimate.

RBC Capital Markets – Outperform, raises price target to $68.00 from $65.00

KO reported better than expected global case volumes +2% led by +5% growth in Latin America, +3% in Asia Pacific and strong growth in Global Ventures and Bottling investments, said analyst Nik Modi.

The analyst added that this is another strong quarter for KO, delivering top-line strength, volume momentum, and high-quality earnings.

According to the analyst, back-half guidance implies a softer third quarter as some shipment timing benefit from the second quarter unwinds, comps get sequentially tougher, and developed markets have pockets of softness.

The analyst believes KO’s fundamentals are strong and the company has the momentum and flexibility to deliver against its targets for the year.

Truist Securities- Maintains Buy rating, $65.00 price target

Analyst Bill Chappell noted KO’s organic revenue was +15% YoY, with growth across all regions, led by North America, EMEA, and LatAm, with organic sales growth of 10%, 30%, and 28%, respectively.

The better-than-expected sales and gross margin (61.4% vs. the analyst’s 60.1% est.) were partially offset by higher-than-expected SG&A (28.6% vs. the analyst’s 28.3% est.) to drive the EPS beat. 

The analyst views KO as well positioned to post mid-single digit organic growth as it fulfills its total beverage company strategy around the world and sees improving trends in the U.S. post bottler re-franchising.

Price Action: KO shares are trading higher by 1.329 at $65.80 at last check Wednesday.

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