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On Tuesday, CFRA analyst Garrett Nelson upgraded Coca-Cola (NYSE:KO) stock from Buy to Strong Buy, setting a new price target of $80, up from the previous $68. Nelson cited the recent decline in the U.S. dollar against major currencies as a potential boost for the company’s earnings, noting that Coca-Cola generated 61% of its total revenue outside the United States last year. The stock has shown strong momentum, delivering a 28% return over the past year and currently trading near its 52-week high of $73.95. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability metrics. The analyst maintained the adjusted earnings per share (EPS) estimates while acknowledging the currency fluctuation as a significant bottom-line advantage for the beverage giant.
Coca-Cola’s financial performance in the United States was highlighted, with a revenue growth of 11% year-over-year in 2024, contrasting with a 2% decline in non-U.S. revenues. Nelson pointed to the fairlife brand as an underestimated growth driver within the U.S. market, with sales surpassing $1 billion. The completion of a new $650 million fairlife plant in upstate New York by the end of the year is expected to further enhance Coca-Cola’s growth prospects.
The analysis by CFRA also addressed investor concerns regarding health initiatives and tariffs, suggesting that these factors are already reflected in the current stock price. Additionally, Nelson emphasized the attractiveness of Coca-Cola’s dividend, which is likely to contribute to the stock’s total return potential moving forward. InvestingPro data reveals that Coca-Cola has maintained dividend payments for 55 consecutive years, with an impressive 10.9% dividend growth in the last twelve months and a current yield of 2.82%.
The new price target is based on a 2026 price-to-earnings (P/E) ratio of 25.4 times, which is a slight premium to Coca-Cola’s historical average multiples. The upgrade and revised target reflect CFRA’s confidence in Coca-Cola’s ability to navigate the current economic landscape and capitalize on growth opportunities, particularly in the U.S. market. With impressive gross profit margins of 61% and a strong return on equity of 42%, the company demonstrates solid operational efficiency. For deeper insights into Coca-Cola’s valuation and growth prospects, investors can access comprehensive analysis through the InvestingPro Research Report, which provides detailed metrics and expert analysis for informed decision-making.
In other recent news, Coca-Cola has announced an increase in its quarterly dividend, marking the 63rd consecutive year of dividend growth. The Board of Directors approved a 5.2% rise, setting the annual dividend at $2.04 per share, up from $1.94 in 2024. In the realm of earnings projections, Piper Sandler has raised its price target for Coca-Cola shares to $80, citing strong near-term momentum and a 5-6% organic revenue growth forecast for 2025. Additionally, Erste Group upgraded Coca-Cola stock from Hold to Buy, driven by the company’s robust profitability and optimistic growth projections, including a forecasted organic sales growth of 5 to 6 percent year-over-year. TD Cowen also maintains a Buy rating on Coca-Cola, with a price target of $78, highlighting the company’s strong revenue growth and effective management strategies.
Meanwhile, Coca-Cola faces potential regulatory challenges as a proposal to ban soda purchases with food stamps gains traction. This initiative could impact sales, raising concerns among investors about future revenue streams. Despite these challenges, Coca-Cola’s strategic focus on new product introductions, such as probiotic lemonades, and its ’All-Weather’ approach are expected to drive growth. The company continues to demonstrate resilience, leveraging its strengths to navigate market challenges effectively.
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