Coca-Cola (KO) Q2 Miss Raises Concerns About Obesity Issues

July 16, 2013 10:52 AM EDT Send to a Friend
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Coca-Cola Co. (NYSE: KO) reported Q2 EPS of $0.63, in-line with the analyst estimate of $0.63. Revenue for the quarter came in at $12.75 billion versus the consensus estimate of $12.97 billion. Second quarter volume grew 1 percent and year-to-date volume grew 3 percent. Goldman Sachs expects shares to be under pressure as a result of the disappointing volume performance.

"Volumes were up only 1% 1Q13 vs. our estimate of 3%. Some investors were bracing for a 2% volume growth but 1% appears to be worse than even a bear-case scenario," said analyst Judy E. Hong. "The weakness was driven by shortfalls in Europe (-4% vs. GSe flat) and Pacific (+2% vs. GSe +4%). North America was in-line with our expectation but was a soft result at -1%, the first volume decline since 1Q10. KO called out weather as being key factors for the poor volumes in both Europe and N. America."

Hong believes investors will now question whether volume softness is all macro and weather-driven.

"Weather has been unusually poor and macro headwinds are a widely known issue, which implies 2H improvement assuming a normal weather. That said, investors are likely to demand more confidence around competition and obesity issues in KO's key markets," concluded Hong.

Goldman Sachs has a Neutral rating on Coca-Cola with a price target of $43.00

For an analyst ratings summary and ratings history on Coca-Cola (NYSE: KO) click here. For more ratings news on Coca-Cola click here.

Shares of Coca-Cola closed at $41.01 yesterday.


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