On Tuesday, Bernstein SocGen Group initiated coverage on Coca-Cola (NYSE:KO) Europacific Partners (NASDAQ:CCEP) with a Market Perform rating and set a price target of $82.00. The initiation reflects an anticipation of a 6% upside potential for the stock, based on the current market performance. The stock is currently trading near its 52-week high of $82.32, having delivered an impressive 30% return over the past year. According to InvestingPro analysis, the company appears to be trading above its Fair Value.
The analyst highlighted Coca-Cola Europacific Partners' strong fundamentals, which are widely recognized in the market. While the forecast includes approximately 4.8% normalized net sales growth, InvestingPro data indicates analysts anticipate a slight sales decline in the current year. The company maintains a healthy gross profit margin of 36.3% and has demonstrated solid revenue growth with a 5-year CAGR of 10%. The company is also anticipated to see profit margin expansion, which will be driven by cost savings, positive operating leverage, and a favorable product mix.
In addition to sales growth and margin expansion, the return of cash to shareholders is expected to contribute to an approximately 11% normalized earnings per share (EPS) compound annual growth rate (CAGR). The company has raised its dividend for 4 consecutive years, with an impressive dividend growth of 81% over the last twelve months. The analyst's commentary aligns with InvestingPro's assessment, which rates the company's overall financial health as "GREAT" with particularly strong scores in profitability and price momentum.
Despite the positive outlook on the company's fundamentals, the analyst's rating aligns with the consensus estimates, suggesting that the market has already accounted for the company's strong points in its current valuation. Coca-Cola Europacific Partners is trading at approximately 16 times the next twelve months plus one (NTM+1) earnings estimates, with a current P/E ratio of 20.9 and EV/EBITDA of 15.2, figures that are above the historical average but slightly below the 16.5 times earnings that the analyst believes the company merits.
The current market performance and valuation of Coca-Cola Europacific Partners reflect a balance of its solid business foundation and the market's existing expectations, leading to the Market Perform rating and the $82.00 price target set by Bernstein. With analyst targets ranging from $63 to $94, investors seeking deeper insights into CCEP's valuation metrics and growth potential can access additional ProTips and detailed financial analysis through InvestingPro.
In other recent news, Coca-Cola Europacific Partners reported third-quarter 2024 revenues of €5.36 billion, aligning with consensus estimates, with a foreign exchange-neutral comparable growth of 2.4%. However, the company has reduced its comparable growth guidance to approximately 3.5%, a decrease from the previously anticipated 4.0%.
Evercore ISI, CFRA, and Citi have all upgraded Coca-Cola Europacific's stock price target, with Barclays (LON:BARC) maintaining its target at $85.00. These firms maintain a positive outlook on the company's performance, despite a challenging third quarter due to adverse weather conditions and geopolitical issues impacting sales.
Looking ahead, Evercore ISI forecasts an operating profit growth of around 8% for fiscal year 2025, supported by stable costs and further cost savings. Barclays and Citi, while acknowledging short-term challenges, express confidence in the company's ability to navigate market fluctuations and maintain its competitive edge.
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