Credit Suisse sees Coca-Cola returning to profit growth next year after long dry stretch for beverage giant

Key Points
  • Credit Suisse says Coca-Cola's new business strategy of selling off bottlers and focusing on new brands will return the company to profit growth the next two years.
  • The firm raises its rating on the beverage giant to outperform from neutral.
A man delivers beverages from a Coca-Cola truck in New York City.
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Credit Suisse raised its rating for Coca-Cola shares to outperform from neutral, saying the beverage company's new "asset-light" business model will drive profit growth for the next two years.

Coca-Cola President James Quincey, who becomes CEO on May 1, has vowed to refranchise and sell 100 percent of the company's North American bottling operations by the year-end.

"After the refranchising, the core Coke business will deliver EPS growth not seen for at least the last five years," analyst Laurent Grandet wrote in a note to clients Wednesday. "We expect price/mix will more than compensate for soft CSD [carbonated soft drinks] volumes with continued volume growth in select NCB [non-carbonated beverages] categories, complemented further by strong growth in equity earnings from the bottlers and Monster Beverage investments."