Barclays raised its 12-month price target for Coca-Cola (NYSE:KO) to $83.00 from $77.00 on Wednesday, while keeping an Overweight rating on the beverage company’s shares.
The bank pointed to Coca-Cola’s renewed emphasis on pursuing a more balanced growth profile - one that blends price and mix improvements with increased volumes - as the central rationale for the higher target. Barclays said the company has articulated a "relatively straightforward story about drivers of volume growth" that underpins its outlook.
While Barclays acknowledged that articulating volume-growth ambitions is not the same as delivering them, the analyst expressed confidence that Coca-Cola can attain low-single-digit volume growth this year without becoming entangled in extended debates over category dynamics or broader portfolio reshaping. The firm also flagged interest in hearing how the CEO-elect intends to refine or accelerate parts of the strategy, a topic Barclays expects to learn more about at the upcoming Consumer Analyst Group of New York (CAGNY) conference.
On corporate portfolio moves, Coca-Cola has decided to retain full ownership of Costa Coffee and is undertaking a review of its operations in China. The company had previously weighed selling the UK-based cafe chain - acquired in 2018 for about $5 billion - but has opted not to divest despite the brand’s business challenges.
In its recent fourth-quarter results, Coca-Cola reported adjusted earnings per share of $0.58, slightly above the consensus range of $0.56-$0.57. Barclays noted that lower-than-expected interest expenses and taxes contributed to the modest EPS beat.
Other sell-side firms have held positive stances following the results. Morgan Stanley maintained an Overweight rating with an $81.00 price target. RBC Capital reiterated an Outperform rating and a $78.00 price target, expecting Coca-Cola to meet consensus estimates in the upcoming reporting cycle. UBS kept a Buy rating with an $82.00 price target, modeling fourth-quarter earnings per share of $0.56 and forecasting another quarter of mid-single-digit organic growth.
Management commentary included CEO James Quincey highlighting rising demand for protein sports drinks. He pointed to the company’s Fairlife power protein product as one of Coca-Cola’s fastest-growing brands in the U.S. That trend is also benefiting other players in the segment, including BellRing Brands, which owns Premier Protein and Dymatize.
What to watch next
- Details from Coca-Cola’s presentations and updates at the CAGNY conference, particularly any strategic shifts signaled by the CEO-elect.
- Further developments on Costa Coffee operations and the company’s review of its China business.
- Quarterly results and whether interest expense and tax outcomes continue to influence earnings beats.