Beverage giant Coca-Cola’s stock recently hit a one-year high. So where is the stock headed to from here? Beverage analysts Marc Greenberg at Deutsche Bank and Lauren Torres of HSBC Securities shared their views.
“Your underlying growth rate outside the U.S. has been better than expected all year,” Greenberg told CNBC. “From here, they can continue that and you have the overlay of good currency and stable pricing lower inputs, margins get better.”
Greenberg has a “buy” rating on Coke and has a $62 price target. He said Coke’s international volume story remains robust.
“Outside the U.S., coke has a free run in most markets—it’s a very dominant number 1 player,” he said. “Stocks underperformed in the last year because the currency headwinds and a lot of global uncertainty. We seem to be getting through a lot of that and yet on a forward multiple basis, it’s still relatively cheap versus long-term.”
In the meantime, Torres said she remains cautious on the stock and has a “neutral” rating with a price target of $56.
“Growth in their more profitable markets have been in decline,” she said. “The U.S. has been weak—we’re also seeing volume decline in Japan and in Europe some of their better growth markets like Russia and Eastern Europe have been in double digit decline over the last couple of quarters.”
Torres said the consumer recovery is going to be slow going into 2010, which will affect the company.
“When you think about the global consumer environment, trends are still quite poor,” she said. “And for us, it’s a valuation call. The stock had a nice move this year so it’s going to take a rest at current levels.”
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Coca-Cola Competes With:
Dr Pepper Snapple Group
PepsiCo
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Disclosures:
Deutsche Bank owns and has investment banking clients who own shares of Coca-Cola. Deutsche Bank also has received non-investment banking related compensation from Coca-Cola within the past year. Coca-Cola has been a client of Deutsche Bank Securities within the past year, during which time it received non-investment banking securities-related services.
Torres has investment banking clients who own shares of Coca-Cola. As of Sept 30 2009, Coca-Cola was a client of HSBC or had during the preceding 12-month period been a client of and/or paid compensation to HSBC in respect of non-securities services.
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