Market Overview

Barclays Finds Coca-Cola's Stock Refreshing As Consumer Staples Industry Suffers

Share:
Barclays Finds Coca-Cola's Stock Refreshing As Consumer Staples Industry Suffers
Related KO
Navigating The Maze Of The Cannabis Market After The Daze Of Summer
Pot Stocks, ETFs, Top News And Data From The Cannabis Industry This Week
Aurora Cannabis: Wow! That Was An Impressive Quarter (Seeking Alpha)

Amid upheaval in the consumer staples industry, The Coca-Cola Co (NYSE: KO) is expected to emerge a leader.

The Rating

Barclays analyst Lauren Lieberman upgraded the stock to Overweight and increased her price target from $45 to $48.

The Thesis

Barclays attributes the company’s year-to-date outperformance of the Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP) more to insulation from sector-wide issues than to broad conviction in the firm’s potential.

As such, Coca-Cola is expected see improved valuation as it evolves through a stable diversification plan, more local-focused operating model and supply chain capabilities better aligned with its bottlers.

“KO is executing a thoughtful business transformation that’s among the most comprehensive we’ve seen (Estee Lauder Companies Inc (NYSE: EL) also comes to mind),” Lieberman wrote in a Thursday note.

The process is expected to drive sustainable, improved growth — 5 percent in organic sales and 6 to 8 percent in profits through 2020, by Barclays forecasts — which could result in a higher valuation premium beyond 25 percent.

“Our model allows cash to build on the balance sheet, though we expect a more asset light and cash flow generative KO to have greater flexibility over time,” Lieberman wrote.

Price Action

At time of publication, Coca-Cola was trading higher by 1.7 percent at $42.26.

Related Links:

This Day In Market History: The First Coca-Cola Is Sold

This Day In Market History: Coca-Cola Launches New Coke

Latest Ratings for KO

DateFirmActionFromTo
Sep 2018GuggenheimInitiates Coverage OnBuy
May 2018BarclaysUpgradesEqual-WeightOverweight
Apr 2018Goldman SachsUpgradesSellNeutral

View More Analyst Ratings for KO
View the Latest Analyst Ratings

Posted-In: Barclays Lauren LiebermanAnalyst Color Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (EL + KO)

View Comments and Join the Discussion!

How To Get Quality In The Core

Take Advantage Of Cisco's Sell-Off, Baird Says