UPDATE: UBS Initiates Coverage on Coca-Cola at Neutral

UBS initiated coverage on Coca-Cola

with a Neutral rating on Tuesday. Analyst Stephen Powers believes, “sizeable restructuring may be needed to rejuvenate margins and profitability,” in North America. Coke's North American problems begin with a “low-to-negative volume environment,” and the company's efforts to emphasize volume restoration have come “at a cost to margins as price/mix and productivity has not yet offset the cost of inflation, marketing expense, and ongoing deleveraging,” said Powers. While Coke's traditional carbonated soft drink division has strong brands and customer loyalty, the company “currently lacks formidable tea and energy brands,” according to Powers. Tea will be “particularly important for growth in Asia,” which should account for much of Coke's volume and profit growth. Shares of Coca-Cola are up a modest 0.3 percent to $38.25.