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Q3 Preview: Coca-Cola Seeks a Pop as it Integrates CCE and Grows Internationally

October 18, 2010 2:16 PM EDT Send to a Friend
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Price: $41.00 +0.07%

Rating Summary:
    12 Buy, 10 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 17 | Down: 38 | New: 6
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Shares of Coca-Cola Company (NYSE: KO) are trading down 6 cents to $59.88 ahead of the company's third quarter results scheduled to be released Tuesday before the opening bell.

The world's largest soft drink maker is expected by analysts to report third-quarter earnings of 89 cents per share on sales of $8.30 billion.

The company reported second-quarter earnings of $1.06 per share on sales of $8.67 billion, compared to the Street's view of $1.03 per share and $8.70 billion respectively.

Since the start of the third quarter, shares of Coca-Cola are up $7.51 or 14.34 percent. Year-to-date, the stock is up $2.88 or 5.05 percent.

A valuation shows that the company is going for a forward P/E of 18.80x full year 2010 estimates. Comparably, rival PepsiCo Inc. (NYSE: PEP) is 16.83x.

Data from Bloomberg shows that 16 analysts have a Buy rating on Coca-Cola, 2 have a Hold and zero have a Sell. The Street's average price target on the company is $64.

Analyst Ratings Through the Quarter

On August 2, JPMorgan upgraded Coca-cola from Neutral to Overweight with a $66 price target.

Credit Suisse reinstated coverage on the stock with an Outperform rating and $70 price target on October 6.

Summary

Goldman Sachs sees Coca-Cola pushing forward on innovation and marketing that should result in profitable growth over time.

Goldman analyst says, "We expect KO to sustain 4%-5% volume growth as emerging/developing markets drive incremental growth over the long term. Our analysis looking at historical GDP and beverage per cap growth point to upside risk to KO’s 3%-4% long-term unit growth target."

On October 8, Goldman reinstated the company at a Buy rating with $68 price target.

Argus sees the company benefiting from strong international results and the recently competed acquisition of Coca-Cola Enterprises Inc. (NYSE: CCE) will have significant long-term growth opportunities.

Argus analyst says, "We believe that the company will benefit from strong international results and favorable currency effects, and that the recently completed acquisition of CCE's North American bottling operations offers significant long-term growth opportunities."

On October 11, Argus maintained its buy rating, raising its price target on Coca-Cola from $60 to $68.




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