Jefferies Reveals Concern over Coca-Cola's Growth, Initiates Hold Rating

In a report published Monday, Jefferies analyst Kevin Grundy initiated coverage on The Coca-Cola Company KO with a Hold rating and $44.00 price target. Grundy noted that Coca-Cola's brand and reach are “among the best in consumer packaged goods.” Despite this, the analyst addressed the company's growth issues. Jefferies wrote, “KO's portfolio is over-levered to CSDs (74% of volume), health & wellness trends aren't going away, and KO's commentary suggests game changing M&A is unlikely. KO is a great company, although it seems less likely to us that it will return to being a great stock in the current environment.” The analyst added that Monster Beverage Corporation MNST is a “sensible fit from an M&A perspective, and would augment KO's growth.” Grundy estimates that a deal with Monster could be four percent accretive to EPS. Shares of Coca-Cola closed at $40.91 on Monday.