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How Wall Street Is Rating Coca-Cola

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Jan. 25 2019, Updated 3:30 p.m. ET

Consensus “buy” recommendation

Coca-Cola (KO) stock carries a “buy” recommendation from the majority of analysts covering the soda giant. As of January 23, Coca-Cola stock was rated a “buy” by 54% or 13 out of 24 analysts while 11 analysts had a “hold” recommendation. None of the analysts had a “sell” opinion.

On December 13, UBS downgraded its rating for Coca-Cola stock from “buy” to “neutral.” However, UBS raised its price target to $51 from $50.

As of January 23, Coca-Cola stock had an average 12-month price target of $51.88, which implies an upside of 7.5%. Coca-Cola stock has risen 1.9% so far in 2019.

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Changing for the better

Coca-Cola has been transforming its business through refranchising its low-margin, high-capital bottling operations. As we discussed in the previous parts of this series, refranchising the bottling operations has led to a major improvement in the company’s margins.

Coca-Cola is also enhancing its beverage portfolio to offer healthier choices to consumers. Coca-Cola already has an extensive product portfolio comprising over 500 beverage brands. Coca-Cola owns 21 brands, including Coca-Cola, Dasani, and Powerade, which generate over $1 billion in annual retail sales. The company is investing in the innovation of several low- or no-sugar beverages to address the requirements of health-conscious consumers.

We mentioned in Part 3 of this series the various bolt-on acquisitions Coca-Cola has made to expand its portfolio of better beverages. With the $4.9 billion acquisition of Costa, Coca-Cola is looking to capture growth opportunities in the $500 billion hot beverages market.

We’ll discuss analysts’ recommendations for PepsiCo stock in the next part of this series.

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