On Wednesday, Coca-Cola (NYSE:KO) HBC AG (CCH:LN) (OTC: CCHGY) shares received an upgrade from BNP Paribas (OTC:BNPQY) Exane, shifting its stock rating from Neutral to Outperform. The firm also increased the price target for Coca-Cola HBC to GBP0.34 from the previous GBP0.28. The stock, currently trading at $35.74, sits near its 52-week high of $37.58, having delivered an impressive 31% return over the past year according to InvestingPro data.
The upgrade comes with a positive outlook on the company's future performance. BNP Paribas Exane anticipates that Coca-Cola HBC will achieve a like-for-like (LFL) sales growth of 8.8% in 2025, which surpasses the average sector expectation of 7.0%.
The projection suggests that Coca-Cola HBC could lead its sub-sector in terms of sales growth. The company has demonstrated solid performance with revenue of $11.1 billion in the last twelve months and maintains a healthy gross profit margin of 35.5%.
According to the analyst from BNP Paribas Exane, this expected growth is likely to drive upward revisions in consensus earnings per share (EPS) forecasts. Such revisions could, in turn, lead to a re-rating of Coca-Cola HBC's stock.
The anticipated improvements in the company's financial performance are linked to the potential for increased market confidence. InvestingPro data shows the company's diluted EPS stands at $1.85, with analysts forecasting $2.35 for fiscal year 2024.
The upgrade also reflects a broader context in which geopolitical developments could impact Coca-Cola HBC's market valuation. The analyst noted that an increase in the likelihood of a ceasefire in Ukraine could contribute to the stock's re-rating, suggesting that market sentiment is sensitive to such external factors.
Investors and market watchers will be keeping a close eye on Coca-Cola HBC's performance and the evolving geopolitical landscape to see if the company can indeed meet or exceed the growth expectations set forth by BNP Paribas Exane. InvestingPro analysis indicates a "GOOD" overall financial health score, with multiple additional ProTips available to subscribers looking to dive deeper into the company's fundamentals.
In other recent news, Coca-Cola Hellenic has been a subject of interest for Bernstein SocGen Group. The firm initiated coverage on the company, assigning an Outperform rating and setting a price target of GBP34.50. They forecast a 7.7% normalized net sales growth for Coca-Cola Hellenic, driven by performance in emerging and developing markets, which is expected to offset lower growth in established markets.
Bernstein also anticipates profit margin expansion for Coca-Cola Hellenic, similar to that of Coca-Cola European Partners (NASDAQ:CCEP). This, along with the return of cash to shareholders, is predicted to contribute to an approximate 13% normalized earnings per share (EPS) compound annual growth rate (CAGR).
Despite potential risks associated with foreign exchange and operating a Russian business at arm's length, Bernstein believes the stock has been undervalued.
Recent developments also indicate that Coca-Cola Hellenic's stock has experienced a de-rating over the past three years. However, Bernstein's analysis suggests that even without considering the Russian segment, Coca-Cola Hellenic is trading at an attractive valuation.
They estimate an 11.9x enterprise value to earnings before interest and taxes (EV/EBIT) for the next twelve months plus one, which is below the 13.5x ratio they believe is warranted for the company.
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