Analyst Sees Turnaround Pressure Building At Coca-Cola

The Coca-Cola Co KO beat first quarter earnings expectations even as its net profits continued on a downward trend.

"Stocks go up with earnings, and we haven't seen that set-up with Coke in a long time," Deutsche Bank's Bill Schmitz Jr. said.

But Schmitz reiterated a Buy rating and $45 target, and said that with bad news priced in, "investors will start to look at the name again" as expectations fall for Coke.

Coke got a brief bounce from its earnings report Wednesday, and changed hands recently at $41.02. Shares are off more than 5 percent during the past three months.

Net profit in the recent period fell 4 percent to $1.56 billion, even as sales rose for the first time in eight quarters.

Schmitz said pressure is building on management to show progress with a turnaround, while quarterly comparisons become easier and costs of ingredients are stable.

The sale of smaller packages of coke at higher prices have helped profit margins and Schmitz said the company is making progress in its re-franchising plan regarding bottlers.

But the company's soft drink market share is off in 23 of the 30 markets tracked by Schmitz last year and the entire market for carbonated beverages is stagnate.

"It's a trend that needs to reverse if the company intends to return to profitable growth," according to Schmitz.