Coca-Cola dazzles analysts with organic sales stunner

Apr. 25, 2022 10:11 AM ETThe Coca-Cola Company (KO)By: Clark Schultz, SA News Editor5 Comments

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Coca-Cola Company (NYSE:KO) moved up 0.88% following earnings on a day that broad market averages are all solidly lower. Analysts were uniformly impressed with the quarter turned in by the beverage giant, particularly the strong organic sales mark of +18% vs. +9% consensus.

Bank of America pointed out that Coca-Cola's (KO) growth was volume-led, with +11 points of concentrate volume, +3 points vs. unit cases on inventory build and +7 points of pricing. Coca-Cola (KO) was noted to have reiterated FY22 guidance including Russia/Ukraine headwinds of 1 point to unit case vol., 1% to 2% to sales, and $0.04 to EPS.

BofA maintained a Buy rating on KO and price objective of $70 based on 26X the FY23 EPS estimate, which is a premium to non-alcoholic beverage peers at 22.9X. BofA thinks a premium multiple is warranted as it expects KO to emerge from the COVID-19 crisis in a stronger position.

Morgan Stanley said strong Q1 results and maintained FY22 guidance from KO offer very clear confirmation that the company is well positioned compared to peers in a turbulent consumer packaged goods environment. An Overweight rating is held on KO following the strong Q1 results.

Wells Fargo also stayed constructive on Overweight-rated Coca-Cola (KO) after noting the beverage giant's top line beat in every division and gross margins that met expectations. The firm said a caveat is that shipments were ahead of consumption (especially LatAm), but sales nevertheless still came in noticeably ahead, even after normalizing for shipment timing. WF said reiterated full-year organic sales guidance from Coca-Cola implies +4 to +5% delivery for the remainder of the year, decelerating from Q1 +18% due partially due to COVID comparisons.

Bernstein may be the most bullish on the Coca-Cola (KO) numbers, saying the blockbuster EPS beat and maintained full-year guidance leaves the potential for upward revisions.

Read more about Coca-Cola's organic sales stunner.

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