CNBC Pro

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

Share
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.
Getty Images

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."

More In Pro News and Analysis

CNBC ProGoldman names its top global stock picks for the rest of the year
CNBC ProBill Miller likes these stocks, including one that he thinks will make ‘multiple times your money’
CNBC ProValue investor Bill Miller is finding some opportunities in the SPAC sell-off