Are Analysts Optimistic about Major Nonalcoholic Beverage Stocks?

Consensus rating

Currently, the majority of analysts have a “buy” recommendation for Coca-Cola (KO), PepsiCo (PEP), and Monster Beverage (MNST) stocks. As of June 29, Coca-Cola stock had a “buy” recommendation from 52% of the 27 analysts covering the soda giant. The company was rated a “hold” by 13 analysts. Currently, there aren’t any “sell” ratings. About 52% of the 25 analysts covering PepsiCo stock have a “buy” recommendation. PepsiCo stock is rated a “hold” by 11 analysts and a “sell” by one analyst.

Both PepsiCo and Coca-Cola are dividend aristocrats, which is a term used for companies that have hiked their dividend for at least 25 consecutive years. This year, Coca-Cola raised its dividend for the 56th consecutive year by 5.4% to $1.56. PepsiCo raised its annual dividend per share by 15% to $3.71 in 2018, marking the 46th straight year of dividend increases. Both Coca-Cola and PepsiCo have a presence in over 200 countries, have strong distribution networks, and own several brands that generate over $1 billion in annual sales.

Are Analysts Optimistic about Major Nonalcoholic Beverage Stocks?

As of June 29, Monster Beverage stock had a “buy” recommendation from 72% of the 18 analysts covering the stock. The company was rated a “hold” by four analysts, while one analyst had a “sell” recommendation. Monster Beverage’s energy drinks enjoy strong demand in the domestic and international markets. However, rising input costs and freight costs are putting pressure on the company’s margins. Monster Beverage is transitioning to Coca-Cola’s distribution network as part of a strategic deal between the two companies. This transition is expected to expand Monster Beverage’s reach and strengthen its position in international markets.

Dr Pepper Snapple is currently rated a “hold” by 12 out of 16 analysts covering the stock and a “buy” by four analysts.

Do analysts see any upside?

As of June 29, the average 12-month price targets for Coca-Cola, PepsiCo, Dr Pepper Snapple, and Monster Beverage were $49.64, $114.70, $125.29, and $60.53, respectively.  These price estimates reflect an upside potential of 13%, 5%, 3%, and 6% for Coca-Cola, PepsiCo, Dr Pepper Snapple, and Monster Beverage, respectively.

Let’s look at the sales expectations for these companies in the next part of this series.