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On Wednesday, UBS analyst Peter Grom raised the price target on Coca-Cola (NYSE:KO) shares to $86, up from the previous $84, while reiterating a Buy rating on the stock. The stock, currently trading at $72.47, has shown strong momentum with a 17.06% year-to-date return and is approaching its 52-week high of $74.38. Grom highlighted Coca-Cola’s stronger-than-expected performance in the first quarter of 2025, emphasizing organic revenue growth, gross margin of 61.07%, and operating profit that all exceeded forecasts. Despite some fluctuations in currency impacting the bottom line, Coca-Cola has maintained its full-year 2025 earnings per share (EPS) outlook. InvestingPro data shows the company maintains a "GOOD" Financial Health Score, with particularly strong profitability metrics.
Coca-Cola’s ability to surpass organic revenue expectations and uphold bottom line projections in the current earnings season was noted as particularly impressive. This performance, according to Grom, could be a rarity among earnings reports this season and underscores the company’s potential for continued outperformance in the market.
The analyst also pointed out that Coca-Cola is currently trading at a premium of approximately 15% compared to its peers, based on UBS’s revised estimates. This premium is notably higher than the historical average, reflected in the current P/E ratio of 28.93. According to InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value. However, Grom’s assessment suggests that despite the premium valuation, Coca-Cola’s clear visibility into its growth prospects justifies the current stock price. For deeper insights into Coca-Cola’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
The UBS analyst concluded by stating that in a market filled with uncertainties, Coca-Cola provides the greatest visibility into its underlying top and bottom line growth, especially when compared to other large-cap consumer staples companies. This visibility, combined with the company’s solid first-quarter performance and consistent dividend growth history, supports the rationale for a higher price target and a continued Buy rating. InvestingPro reveals that Coca-Cola has maintained dividend payments for 55 consecutive years, with 8 additional key insights available to subscribers.
In other recent news, Coca-Cola reported first-quarter revenue of $11.216 billion, which was slightly below Truist Securities’ expectations but aligned with the consensus estimate. The company’s adjusted earnings per share (EPS) met both Truist and consensus estimates at $0.73. Coca-Cola maintained its full-year 2025 guidance, expecting organic sales growth of 5% to 6% and adjusted EPS growth of 2% to 3%. Morgan Stanley (NYSE:MS) reiterated its Overweight rating on Coca-Cola, noting the company’s strong market position and pricing power, with a 5% year-over-year price increase in the first quarter. BofA Securities also maintained a Buy rating, highlighting Coca-Cola’s organic sales growth of 6%, surpassing expectations, and strong performance in regions like Latin America and Asia Pacific. However, Goldman Sachs kept a Neutral rating due to ongoing tax litigation with the IRS, which poses financial risks. Barclays (LON:BARC) maintained an Overweight rating, acknowledging a slight downward revision in the full-year EPS forecast but noting Coca-Cola’s resilience in key markets, particularly in Asia Pacific. These developments reflect Coca-Cola’s robust performance amidst market challenges and strategic financial management.
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