Deutsche Bank Downgrades Coca-Cola (KO) to Hold Due To Economic Slowdown
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Deutsche Bank downgrades Coca-Cola (NYSE: KO) from Buy to Hold and lowered its price target from $64 to $56, citing the economic slowdown.
Commenting on the Coca-Cola downgraded, the firm said, "Coke shares have outperformed a down market considerably, but face slower volumes at home and abroad, currency headwinds based on DB forecasts and thus lower equity income over the next year. Our 2009 $3.26 forecast moves $0.08 lower (cons $3.34), while our revised forward multiple of 17 times reflects greater economic uncertainty, particularly in emerging markets."
The firm is lowering 4Q08 and 2009 estimates to account for lower volume growth, currency benefit and equity income, based on lower indications for global economic growth. Q4 EPS estimates was lowered from $0.63 to $0.61. FY09 EPS estimates was lowered from $3.34 to $3.25. FY09 volume growth estimate for the US falls from 2% to 0.4% and Latam from 4.8% to 3.9%. The firm believes North America presents the most downside risk.
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