Coca-Cola Is Well-Positioned For Long-Term, Sustainable Growth, Says Goldman Sachs

On Wednesday, Coca-Cola Company KO reported a third-quarter 2024 sales decline of 1% year-on-year to $11.9 billion, beating the analyst consensus estimate of $11.59 billion.

Unit case volume declined by 1%. Growth led by Brazil, the Philippines, and Japan was more than offset by declines in China, Mexico, and Turkey.

Goldman Sachs highlighted that despite somewhat tempered investor expectations for the third quarter —partly due to PepsiCo Inc‘s PEP weaker-than-expected performance—Coca-Cola exceeded expectations again with strong results and an upbeat outlook.

Earlier this month, Pepsi’s reported mixed third-quarter results and lowered its 2024 organic revenue guidance.

The company reported a third-quarter net revenue decline of 0.6% year-over-year to $23.319 billion, with organic growth of 1.3%, falling short of the consensus estimate of $23.825 billion.

Coca-Cola forecasts 2024 organic revenue growth of approximately 10%, compared to prior guidance of 9%—10%.

The global beverage company expects to deliver adjusted EPS growth of 14% to 15% compared to prior expectations of 13% to 15%.

The analyst notes that Coca-Cola’s guidance is solid compared to its consumer packaged goods (CPG) peers, made even more impressive given that it’s following a couple of solid years.

Goldman Sachs believes Coca-Cola's guidance reflects strong consumer resilience and the company's solid performance despite a tough operating landscape. However, persistent foreign exchange challenges and slower reported dollar EPS growth this year—and likely next—could put short-term pressure on the stock.

“Bottom line – We remain impressed by KO's top-line momentum and execution in a very challenging environment, as it further positions itself well for healthy, sustainable, l.t. growth,” a Goldman Sachs analyst writes.

The analyst maintains a Neutral rating on Coca-Cola.

Price Action: KO stock is down 1.6% at $68.32 at last check Wednesday.

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