Market Overview

Macquarie: Coca-Cola A Winner With BodyArmor Investment As Pepsi's Gatorade Cedes Share

Share:
Macquarie: Coca-Cola A Winner With BodyArmor Investment As Pepsi's Gatorade Cedes Share

Coca-Cola Co (NYSE: KO)'s minority investment in sports drinks maker BodyArmor is a win-win scenario for both parties, according to Macquarie Research.

The Analyst

Analyst Caroline Levy maintained a Neutral rating on Coca-Cola with a 12-month price target of $50. (See Levy's track record here.)

The Thesis

BodyArmor has ample room to grow over multiple years in North America and abroad, Levi said in a note. A $6 million investment by Kobe Bryant along with NCAA sponsorship, Coca-Cola's energized bottling system implemented since November and BodyArmor's founder Mike Repole's leadership is the recipe for a winning combination, according to the analyst.

Since BodyArmor's transition into the Coca-Cola's bottling system, the brand's dollar share rose from 2 percent two years ago to 7 percent, the analyst said, citing IRI data.

sd.png

Source: Macquarie

The analyst sees retail sales of BodyArmor rising from $400 million currently to $1 billion by 2021, thanks to healthier ingredients relative to PepsiCo, Inc. (NASDAQ: PEP)'s Gatorade and increased marketing and distribution opportunities.

"We have confidence that the bottlers can appropriately support BodyArmor and deliver a pincer strategy of value brand (Powerade) and premium brand (BodyArmor) to gain share vs Gatorade," Levy wrote in the note. The firm sees volume contracting in the near-term but value increasing significantly even as Gatorade continues to slump.

Levy also sees no merit in the rumors of BodyArmor launching an energy drink to compete against Monster Beverage Corp (NASDAQ: MNST).

Related Links:

Which Beverages Stocks Will Pop? UBS Weigh In On The Sector

Coca-Cola CEO Talks Coffee, Cannabis With Cramer

Latest Ratings for KO

DateFirmActionFromTo
Jul 2019Initiates Coverage OnOverweight
Jul 2019MaintainsMarket Perform
Jul 2019MaintainsNeutral

View More Analyst Ratings for KO
View the Latest Analyst Ratings

Posted-In: BodyArmor Caroline Levy Gatorade Macquarie Research PoweradeAnalyst Color Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (KO + MNST)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
WUBABOCOM InternationalDowngrades
DLTROTR GlobalUpgrades
ARCCCompass PointDowngrades
GTYHCitiInitiates Coverage On7.0
NKEGuggenheimMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Surprisingly Strong Earnings From Navistar May Mark The End Of A Long Turnaround

Credit Suisse Sees 15% Upside For Stocks In 2019