On Friday, Bernstein SocGen Group updated its financial outlook on Coca-Cola (NYSE:KO) HBC AG (CCH:LN) (OTC: CCHGY), increasing the price target to GBP 35.00 from GBP 34.50, while reiterating an Outperform rating on the stock. The adjustment reflects a positive view of the company's growth prospects, particularly in emerging markets. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong profitability metrics and a track record of raising dividends for four consecutive years.
The analyst at Bernstein highlighted Coca-Cola HBC's potential for approximately 7.5% normalized net sales growth in constant currency terms. This growth is expected to be driven by the company's performance in faster-growing Emerging and Developing markets, which may be somewhat balanced by the slower growth in Established markets. The forecast also includes an anticipated expansion in profit margins, comparable to that of Coca-Cola European Partners (NASDAQ:CCEP), and a return of cash to shareholders. These factors are projected to contribute to a roughly 13% normalized earnings per share (EPS) compound annual growth rate (CAGR), positioning Bernstein's expectations above the market consensus. The company currently maintains a healthy gross profit margin of 35.5% and offers a dividend yield of 2.8%.
Despite the optimistic growth outlook, Bernstein acknowledged certain risks associated with Coca-Cola HBC's operations. The company faces higher foreign exchange risk, particularly with the Nigerian Naira (NGN) and the Egyptian Pound (EGP). Moreover, Coca-Cola HBC's Russian business is currently being managed at arm's length, with no cash being repatriated to the parent company. These risks have contributed to a devaluation of the stock over the past three years. InvestingPro analysis shows the stock trades with relatively low price volatility, with a beta of 0.94, potentially offering some stability amid market fluctuations.
Nevertheless, Bernstein's analysis suggests that even after excluding the Russian segment, Coca-Cola HBC's stock is trading at an attractive valuation. The firm's estimates show the company trading at just 10.7 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBIT) for the next twelve months plus one, which is below the 13.0 times valuation Bernstein believes is warranted. This assessment underpins the rationale for the improved price target, signaling confidence in the stock's investment potential despite the identified trade-offs. InvestingPro subscribers can access additional insights, including detailed Fair Value analysis and over 30 financial metrics, to make more informed investment decisions.
In other recent news, Coca-Cola HBC AG has seen several noteworthy developments. The company's earnings and revenue have been a focal point, with Kepler Cheuvreux forecasting approximately 7% growth in earnings before interest and taxes (EBIT) and 9% growth in earnings per share (EPS) in the coming years. The firm predicts a more conservative 5.5-6.0% growth in the markets Coca-Cola HBC operates in, compared to the company's medium-term top-line growth forecast of 6-7%.
In addition, Coca-Cola HBC received an upgrade from BNP Paribas (OTC:BNPQY) Exane, shifting its stock rating from Neutral to Outperform. The firm anticipates a like-for-like (LFL) sales growth of 8.8% in 2025, based on the company's revenue of $11.1 billion in the last twelve months and a healthy gross profit margin of 35.5%.
Bernstein SocGen Group also initiated coverage on Coca-Cola Hellenic, assigning an Outperform rating. The firm forecasts a 7.7% normalized net sales growth for Coca-Cola Hellenic, driven by performance in emerging and developing markets. Despite potential risks associated with foreign exchange and operating a Russian business at arm's length, Bernstein believes the stock has been undervalued. These recent developments reflect positive expectations for Coca-Cola HBC's financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.