Market Overview

Cowen's Top Cigarette And Soda Stocks

Share:
Related KO
Watch These 7 Huge Put Purchases In Monday Trade
Benzinga's Top Upgrades, Downgrades For January 19, 2017
Top Safe Gain Champion Dogs For January (Seeking Alpha)
Related DPS
Barclays' Favorite In Big Beverage Group May Surprise You
8 Notable Stocks Trading Ex-Dividend Friday, December 9
Packaged beverage sales at convenience stores seen improving (Seeking Alpha)

A new report by Cowen focused on cigarette and soda stocks. With the major names in the two spaces already reporting Q1 earnings, analysts discussed their updated outlook for the stocks along with recent trends that investors should be watching.

Volume Declines Improving

In the tobacco space, volume declines have eased over the past nine months while pricing has picked up. Soda volumes remain in decline, although analysts note that trends have largely stabilized and dollar sales trends have been improving.

According to the report, price gap management was the key theme for soda and tobacco companies in Q1.

Related Link: 3 Major Technical Ideas In 3 Charts

Improved Cigarette Pricing

Price increases in the low-end of the cigarette category have driven consumers toward high-end products, a move which analysts view as a sustainable trend. According to the report, recent market share gains in the industry have gone to leading brands, which control the entire premium tobacco category.

Soda Companies Taking Different Approaches

At The Coca-Cola Co (NYSE: KO), a climbing relative price premium has not affected the company’s market share gains. Dr Pepper Snapple Group Inc (NYSE: DPS) has focused instead on increasing the company’s price discount relative to the rest of the category, a strategy which has also gained market share for the company.

Outlook

For the big tobacco names, Cowen rates the stock of Altria Group Inc (NYSE: MO) Outperform and the stocks of Lorillard Inc (NYSE: LO) and Reynolds American Inc (NYSE: RAI) Market Perform.

For the big three soda names, Cowen has an Outperform rating on Pepsico Inc (NYSE: PEP) and a Market Perform rating on Coca-Cola and Dr Pepper Snapple.

Latest Ratings for KO

DateFirmActionFromTo
Jan 2017Wells FargoDowngradesOutperformMarket Perform
Jan 2017BarclaysInitiates Coverage OnEqual-Weight
Jan 2017Goldman SachsDowngradesNeutralSell

View More Analyst Ratings for KO
View the Latest Analyst Ratings

Posted-In: Cowen Cowen & CoAnalyst Color Long Ideas Analyst Ratings Trading Ideas

 

Related Articles (DPS + KO)

View Comments and Join the Discussion!