On Monday, Morgan Stanley (NYSE:MS) upgraded Coca-Cola (NYSE:KO) Europacific Partners (NASDAQ:CCEP) from Equal-weight to Overweight, boosting the price target to $87.00 from the previous $69.00. The firm cites increased confidence in the company's fourth-quarter 2024 and full-year 2025 outlook, along with potential catalysts such as the expected inclusion in the FTSE 100 and the resumption of share buybacks after several years.
The optimism follows the company's presentation at the Morgan Stanley Global Consumer & Retail Conference last week, where management expressed confidence in a strong end to 2024. Morgan Stanley's analysis suggests that Coca-Cola Europacific Partners is on track to meet its long-term growth algorithm of 4%/7% FX-N revenue/operating income growth in 2025. This forecast aligns with consensus but contrasts with other consumer packaged goods (CPG) companies, which face greater uncertainty and risk in their estimates.
The upgrade reflects Coca-Cola EP's position as a favorable post-U.S. election investment, with no direct tariff risks and limited foreign exchange exposure. Morgan Stanley also anticipates untapped revenue and margin opportunities in the Philippines, and, over a longer term, in Indonesia.
Further justifying the price target increase, Morgan Stanley has raised its earnings per share (EPS) projections for fiscal years 2025 and 2026 by 1% and 4%, respectively. This adjustment accounts for better visibility in top-line growth and margins, as well as the anticipated effect of share repurchases.
The new price target of $87.00 is based on an 18.5 times 2026 estimated price-to-earnings (P/E) ratio, which is a premium compared to Coca-Cola EP's average 17 times next twelve months (NTM) P/E since the 2015 merger. This premium is deemed appropriate due to the company's superior visibility and the potential catalysts on the horizon.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.