On Saturday, UBS updated its outlook on Coca-Cola (NYSE:KO) Bottlers Japan Holdings Inc (2579:JP) (OTC: CCOJF), increasing the price target to JPY2,500 from JPY2,400 while maintaining a Buy rating on the stock. The firm anticipates a positive shift for the company, citing several factors that could enhance profitability and shareholder returns in the coming years.
The decision to raise the price target is based on the expectation that upcoming price hikes are likely to boost the company's profits by 2025. Additionally, the firm predicts that as profitability improves, Coca-Cola Bottlers Japan will have more strategic options available and will be able to continue taking proactive measures.
UBS also expects that the company's free cash flow (FCF) will improve, which should support future shareholder returns. This financial health is projected to lead to a return on equity (ROE) that exceeds the cost of equity by the fiscal year ending December 2028, potentially triggering a re-rating of the company's stock back to its book value.
In light of these projections, UBS has raised its earnings per share (EPS) forecast for the fiscal year ending December 2026 by 11%. The revised price target represents a 21% potential upside over the next 12 months, signaling confidence in the company's financial trajectory.
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