Coca Cola Femsa (KOF) PT Lowered to $112 at HSBC

HSBC analyst Carlos Laboy lowered the price target on Coca Cola Femsa (NYSE: KOF) to $112.00 (from $115.00) while maintaining a Buy rating.

The analyst said: "Coca-Cola FEMSA’s Long-Term Relationship Management (aka LTRM) agreement with The Coca-Cola Company is producing stronger results than anticipated for both firms. The three-year old collaboration agreement was intended to compel LatAm bottlers to step up investment in pursuit of a data-rich, digitally enabled brand and market development system to accelerate revenue growth. It’s working. At present, KOF is powering its B2B platforms with AI and analytics to drive brand-package-price segmentation at an unprecedented granular level by point of sale. This and other disruptive digital capabilities provides it with an unmatched line of sight and execution capability into 2.1 million stores. KOF is now able to distribute alcohol beverages, snacks, candy, and home care products that don’t have direct store delivery into the fragmented trade. Campari in Brazil went further and signed up for exclusive distribution and stepped up market development. KOF earns a dedicated margin of 15%-30% from selling and distributing the top selling brands of other firms, a higher level than wholesalers. Scale from rising demand for Coke products is doubling ROA since 2020 as other products ramp up."

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