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Pro Analysis

Deutsche Bank downgrades Coca-Cola, P&G on investors' 'migration' out of staples

A man delivers beverages from a Coca-Cola truck in New York City.
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A man delivers beverages from a Coca-Cola truck in New York City.

Deutsche Bank on Tuesday downgraded both Coca-Cola and Procter & Gamble to hold from buy, predicting that any short-term positive catalysts for the household names could be trampled by a stampede out of consumer staples stocks.

Since the U.S. presidential election on Nov. 8, the S&P consumer staples sector is down 1.2 percent, compared with a gain of 17 percent for the financial sector, and other groups such as energy, industrials and materials, which are all up more than 8 percent on expectations for higher rates and a pickup in the economy under President-elect Donald Trump.

"Consumer staples as an indiscriminate, yield enhancing asset class propped up by index funds is still long in the tooth, especially if, as we expect, outsized passive investments in the group head to perceived greener growth pastures better aligned with an improving U.S. macro environment," equity analyst Bill Schmitz wrote in a note to clients.