Jefferies has maintained a Hold rating on Coca-Cola (NYSE: NYSE:KO) shares and increased the price target to $77.00 from the previous $73.00.
The adjustment follows Coca-Cola's third-quarter performance, which surpassed expectations in terms of organic growth and earnings per share (EPS).
The company reported a strong quarter, with organic revenue and EPS both exceeding forecasts. The analyst from Jefferies noted that Coca-Cola's business appears robust, successfully navigating through economic challenges with effective pricing strategies to counter hyperinflation, which is showing signs of moderation.
Coca-Cola has also seen sequential improvements in volume, and the analyst anticipates that the company's organic revenue growth will be more evenly distributed in the coming year. This is expected to help the company maintain its momentum into 2025.
Despite facing headwinds from higher interest expenses and foreign exchange pressures, which are predicted to have a mid-single-digit EPS impact in 2025 and a 9 percentage point impact in 2024, Coca-Cola is believed to have sufficient strategies in place to manage these challenges and still achieve EPS growth.
In other recent news, Coca-Cola has reported mixed performance in its third quarter 2024 earnings. Despite a 1% decline in volume, the company posted a 9% growth in organic revenues and a 5% increase in comparable earnings per share (EPS) to $0.77. Coca-Cola has also made a significant $6 billion tax deposit to the IRS, related to an ongoing dispute.
Recent developments include a revision to the 2024 guidance, expecting about 10% organic revenue growth and 14% to 15% EPS growth. Morgan Stanley has adjusted its price target for Coca-Cola, reducing it to $76.00 from the previous $78.00, while maintaining an Overweight rating on the stock. The company's strong position in the market and robust pricing power were highlighted as key factors in this rating.
Coca-Cola's Fairlife brand surpassed $1 billion in retail sales, contributing significantly to North America's revenue mix. However, the company anticipates approximately 6% organic sales growth in Q4, a decrease from the 9% in Q3.
Analysts from Goldman Sachs and JPMorgan have recognized the company's strong organic sales growth, with inquiries made about Q4 organic sales growth projections and potential regulatory impacts in Mexico.
InvestingPro Insights
To complement Jefferies' analysis of Coca-Cola (NYSE: KO), recent data from InvestingPro offers additional perspective on the company's financial health and market position. Coca-Cola's market capitalization stands at an impressive $293.11 billion, underscoring its status as a beverage industry giant. The company's revenue for the last twelve months as of Q3 2024 reached $46.37 billion, with a gross profit margin of 60.43%, highlighting its strong pricing power and operational efficiency—factors that align with Jefferies' observations on the company's effective pricing strategies.
InvestingPro Tips reveal that Coca-Cola has raised its dividend for 54 consecutive years, demonstrating a long-term commitment to shareholder returns. This consistency in dividend growth, coupled with the current dividend yield of 2.85%, may appeal to income-focused investors. Additionally, the company's stock generally trades with low price volatility, which could be attractive to risk-averse investors in the current economic climate.
It's worth noting that InvestingPro offers 11 additional tips for Coca-Cola, providing a more comprehensive analysis for investors seeking deeper insights into the company's prospects and challenges.
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