Goldman Sachs maintains Neutral rating on Coca-Cola stock, $65 target

On Tuesday, Goldman Sachs reiterated its Neutral rating on Coca-Cola (NYSE:KO) shares with a steady price target of $65.00, below the current trading price of $71.85. The firm’s assessment comes amid Coca-Cola’s continued legal battles with the Internal Revenue Service (IRS). According to InvestingPro data, despite these challenges, Coca-Cola maintains a GOOD financial health score, supported by impressive gross profit margins of 61%. Despite acknowledging the company’s strong sales momentum and effective management in a tough market, Goldman Sachs remains cautious due to the ongoing tax litigation.

Coca-Cola is currently navigating a dispute with the IRS, which has raised concerns over potential tax liabilities. According to the company’s latest 10-Q filing, management estimated that the potential combined tax and interest liability could reach approximately $12 billion as of December 31, 2024. This significant figure underscores the financial risks that Coca-Cola faces, which contributes to Goldman Sachs’ decision to maintain a Neutral stance on the stock. Despite these challenges, the company has demonstrated resilient performance with revenue of $47.06 billion in the last twelve months.

The financial institution also cited additional factors that warrant a cautious approach, including possible increased interest expenses and the impact of foreign exchange headwinds. These elements could potentially affect Coca-Cola’s financial performance, leading to Goldman Sachs’ decision to stay on the sidelines for the time being.

While Coca-Cola has demonstrated an ability to achieve growth and execute its strategies effectively, the balance of potential gains against the risks posed by the IRS situation and market challenges has led to the reaffirmed Neutral rating. Goldman Sachs’ position reflects a wait-and-see approach as these factors continue to play out for Coca-Cola in the current fiscal climate. Notably, InvestingPro analysis suggests the stock is currently trading above its Fair Value, though investors might find comfort in the company’s 54-year track record of consecutive dividend increases. For deeper insights into Coca-Cola’s valuation and growth prospects, including 12 additional ProTips, check out the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Coca-Cola reported its first-quarter earnings for 2025, showing a slight beat on earnings per share (EPS) but a shortfall in revenue expectations. The company posted an EPS of $0.73, surpassing the forecast of $0.72, while its revenue of $11.1 billion fell short of the anticipated $11.2 billion. Barclays (LON:BARC) maintained an Overweight rating on Coca-Cola stock, with a price target of $73, despite a slight downward revision in the company’s full-year EPS forecast on a constant currency basis. The analyst noted Coca-Cola’s organic revenue growth of 6%, aligning closely with market expectations. The Asia Pacific region, particularly India and China, showed strong performance with a 6% increase in unit case volume. Despite challenges in North America, Coca-Cola’s robust price and product mix helped offset softer volume growth. The company reaffirmed its 2025 guidance, projecting organic revenue growth of 5-6% and comparable currency-neutral EPS growth of 7-9%, while anticipating some currency headwinds.

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