On Tuesday, Evercore ISI, a reputable financial institution, updated its outlook on Coca-Cola (NYSE:KO) Europacific Partners (NASDAQ:CCEP), increasing the stock's price target from $78.00 to $82.00. The firm has maintained an Outperform rating on the stock, indicating a positive view of its potential performance.
Coca-Cola Europacific Partners experienced a less robust third quarter, impacted by several factors. Adverse weather conditions led to decreased consumer demand in the away-from-home segment in Europe, while geopolitical issues in Indonesia further dampened sales. As a result, the company has revised its 2024 organic sales growth forecast downward from approximately 4% to around 3.5%.
Despite the downward adjustment in sales guidance, Evercore ISI anticipates an uptick in Coca-Cola Europacific's performance in the fourth quarter. The firm's optimism is based on several factors, including a reduced dependency on the away-from-home market in Europe, the addition of two extra trading days, and more favorable trends in the Philippines.
Looking ahead to fiscal year 2025, Evercore ISI expresses confidence in Coca-Cola Europacific Partners' ability to achieve approximately 4% organic sales growth. The forecast is underpinned by expected increases in volume, pricing, and product mix. Additionally, an operating profit growth of around 8% is projected, bolstered by more stable costs of goods sold (COGS) and the realization of further cost savings and efficiencies.
The financial institution's positive outlook is also supported by the potential for Coca-Cola Europacific Partners to benefit from operational improvements, synergies from recent acquisitions, prospects for additional market share gains, and the possibility of future acquisitions. Evercore ISI believes that these factors will contribute to a re-rating of the company's stock as investors gain a greater appreciation for its growth potential and strategic initiatives.
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%. CFRA has increased the stock price target for Coca-Cola Europacific Partners to $82.00, maintaining a Hold rating.
Barclays (LON:BARC) also reaffirmed its confidence in the company, maintaining an Overweight rating with a price target of $85.00, despite a challenging second quarter. Citi has increased its stock price target for Coca-Cola Europacific Partners to EUR79.00, maintaining a Buy rating.
Citi also revised its full-year 2024 group organic sales growth and organic EBIT growth forecasts to +3.5% and +6.5%, respectively. These recent developments reflect the resilience of Coca-Cola European Partners (NASDAQ:CCEP)' business model and operational effectiveness amidst market fluctuations.
InvestingPro Insights
Complementing Evercore ISI's optimistic outlook, InvestingPro data reveals that Coca-Cola Europacific Partners (NASDAQ:CCEP) has a market capitalization of $35.94 billion and a P/E ratio of 20.4. This valuation aligns with the company's solid financial performance, as evidenced by its revenue of $20.52 billion over the last twelve months and a healthy gross profit margin of 36.33%.
InvestingPro Tips highlight that CCEP has raised its dividend for 3 consecutive years, demonstrating a commitment to shareholder returns. This is particularly noteworthy given the company's recent challenges and revised growth forecasts. The dividend yield currently stands at 2.08%, with a dividend growth rate of 6.76% over the last twelve months.
While Evercore ISI projects future growth, it's worth noting that analysts anticipate a sales decline in the current year, according to another InvestingPro Tip. This aligns with the company's revised 2024 organic sales growth forecast mentioned in the article. However, the stock's low price volatility suggests that investors may be taking a long-term view of CCEP's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for CCEP, providing a deeper understanding of the company's financial health and market position.
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